Final answer:
Currency is cash held in the form of coins and paper money. It is part of the M1 money supply, which also includes checkable deposits or demand deposits held in checking accounts.
Step-by-step explanation:
Currency is cash held in the form of coins and paper money. It refers to the money outside of banks that circulates in the economy, such as the money in your wallet or in your couch cushions. Currency is considered part of the M1 money supply, which also includes checkable deposits or demand deposits held in checking accounts.
Currencies serve various purposes in an economy, including facilitating the exchange of goods and services, acting as a store of value, and serving as a unit of account for pricing and transactions. They also play a role in international trade, investment, and as a benchmark for economic indicators. Currencies can represent a nation's economic strength and stability, influencing global financial markets.