The difference between M1 and M2 is given by which of the following?
A) M1 includes currency, coins, gold and silver, whereas M2 does not contain gold and silver.
B) M1 is made up of currency, traveler's checks, and money in checkable accounts, whereas M2 contains M1 plus savings deposits and time deposits.
C) M1 is limited to currency, whereas M2 contains M1 plus traveler's checks and money in checkable accounts.
D) M1 includes currency and traveler's checks, whereas M2 contains M1 plus money in checking accounts.

Question

Quizplus · Accepted Answer

M1 is essentially cash and checking deposits, while M2 includes all of M1 plus savings deposits, time deposits (like CDs) and money market funds. M2 is a broader measure of the money supply than M1 because it includes assets that are highly liquid but are not cash. Therefore, M1 is a subset of M2.

The Difference Between M1 and M2 Is Given by Which