How does M2 differ from M1?
A) M2 includes holdings of gold but excludes currency.
B) M2 is smaller than M1.
C) M2 excludes traveler's checks but includes money market mutual funds.
D) M2 includes M1 plus time deposits.

Question

Quizplus · Accepted Answer

M2 is a broader measure of the money supply than M1. It includes all of M1 (which consists of currency, demand deposits, and other liquid instruments) plus savings deposits, time deposits under $100,000, and non-institutional money market funds.

How Does M2 Differ from M1