Question

Do carry a lot of cash? Why or why not? Do you think cash and coins will disappear? Why or why not? Do you still use paper checks? Define M1 and M2.

Answer 1

No, I do not carry a lot of cash with me. It is a lot easier to manage expenditure when every purchase needs to be justified. Not only does cash present a lot of challenges like security, theft, country's currency limits etc. It is not as easy to manage, store and carry as electronic forms of money. No, at least not for a long time. I do not think that cash or coins will disappear. It would be unfeasible yet to completely use an electronic form of payment due to the fact that there's a slight chance that not every payment, expenditure can be monitored. It provides an easy target for identity theft and the security measures aren't sophisticated enough to deal with it.

I do not use paper checks anymore, due to the reason that electronic payment has allowed essentially the same functionality to be reproduced in electronic options.

M1 is a measure of money supply which takes into account the current level of cash Or assets that can immediately be converted into cash. While M2 involves m1 and the use of short-term deposits at the bank.