How does currency differ from money?

How does currency differ from money?

• A. Currency is the physical money (coins and notes) in circulation; money includes currency plus other liquid assets like checking deposits.
• B. Currency is any liquid asset.
• C. Currency is a type of stock.
• D. Currency is a central bank account.

Answer: (A)

Currency is the physical money—coins and banknotes—that circulates among people. Money is a broader concept that includes currency plus other highly liquid financial claims that can be readily used to make purchases, such as checking deposits. Economists measure money with aggregates like M1 by adding currency in circulation to checkable deposits, and broader measures include additional near‑money assets. So currency is the tangible form, while money covers currency plus these easily usable claims. The other statements don’t fit because currency isn’t every liquid asset, it isn’t a stock, and it isn’t a central bank account.

Currency is the physical money—coins and banknotes—that circulates among people. Money is a broader concept that includes currency plus other highly liquid financial claims that can be readily used to make purchases, such as checking deposits. Economists measure money with aggregates like M1 by adding currency in circulation to checkable deposits, and broader measures include additional near‑money assets. So currency is the tangible form, while money covers currency plus these easily usable claims. The other statements don’t fit because currency isn’t every liquid asset, it isn’t a stock, and it isn’t a central bank account.