Most of the financial assets added to the M2 definition of money supply provide their owners with a higher rate of return than do M1 financial assets.

Question

Quizplus · Accepted Answer

M2 includes M1 (currency and demand deposits) and adds other financial assets such as savings accounts, time deposits, and money market mutual funds. These additional assets typically offer higher interest rates and returns than currency and demand deposits, which are the primary components of M1.

Most of the Financial Assets Added to the M2 Definition