M2 includes
A)cash held by banks and by the public plus deposits at the Federal Reserve.
B)currency plus checkable accounts and traveler's checks.
C)currency plus checkable accounts plus traveler's checks plus small CDs and money market accounts.
D)just cash held by the public.

Question

Quizplus · Accepted Answer

M2 includes currency (notes and coins) in circulation, checkable deposits, traveler's checks, savings deposits, money market accounts, and small CDs. Therefore, option C (currency plus checkable accounts plus traveler's checks plus small CDs and money market accounts) is the correct answer. Options A and B are not comprehensive enough to capture all the components of M2, while option D only includes cash held by the public, which is not enough to represent the broader money supply.

M2 Includes