M1 has decreased in its usefulness in understanding inflation due to:
A) the increased use of checks in the economy.
B) the introduction of money market mutual fund shares and similar checking substitutes.
C) more reliance on the use of currency.
D) the increased use of electronic payments.

Question

Quizplus · Accepted Answer

The introduction of money market mutual fund shares and similar checking substitutes has led to an increase in the use of M2 and M3, which have replaced M1 as the preferred measures of money supply in understanding inflation. The other choices do not directly affect the usefulness of M1 in understanding inflation.

M1 Has Decreased in Its Usefulness in Understanding Inflation Due