20 True/False. Click an answer to see feedback immediately. Score updates as you go. Covers M0/MB, M1, M2, M3, reclassification, and common student-life transactions.
1) Currency in circulation (notes & coins held by the public) is included in every money aggregate listed here: M0 (proxy), MB, M1, M2, and M3.
2) Bank reserves at the Fed are counted in M1.
3) Vault cash is NOT part of the monetary base (MB).
4) Demand deposits and other checkable deposits are part of both M1 and M2 (and therefore also appear in M3).
5) Under the current (post-2020) definition, savings deposits are NOT counted inside M1.
6) Moving money from checking → savings leaves today’s M1 unchanged.
7) Retail money market funds (MMFs) are part of M1.
8) Small time deposits (<$100k) are included in M2 but not in M1.
9) Large time deposits and institutional MMFs are included in M2.
10) Taking out a new bank loan credited to your checking account typically increases both M1 and M2 (MB unchanged).
11) Paying down a credit-card balance from checking will increase M1 because your deposits fall.
12) Withdrawing cash from an ATM (from your checking account) changes today’s M1.
13) The Federal Reserve directly sets the level of M2 each month.
14) The 2020 measurement/reclassification change caused a one-time level jump in M1, even though underlying cash didn’t suddenly surge that day.
15) During QT and higher rates, deposits often shift to MMFs/T-bills, and M2 can increase.
16) Depositing cash at a bank reduces currency in circulation and increases bank reserves; the monetary base (MB = currency + reserves) is roughly unchanged.
17) Buying shoes with a debit card typically leaves aggregate M1 unchanged (your deposit ↓, the store’s deposit ↑).
18) M3 is an official monthly series published by the Federal Reserve.
19) The monetary base equals currency in circulation plus reserves held at the Fed.
20) Converting savings into a 6-month CD raises M2, since CDs are “extra” on top of savings.