Which statement is TRUE?

Question

Quizplus · Accepted Answer

M2 is a broader definition of the money supply that includes M1 plus savings accounts, time deposits, and other types of deposits. Therefore, statement B is true. Statement A is false because M1 includes the most liquid types of assets, including cash, demand deposits, and traveler's checks, but not the gold stock. Statement C is false because neither M1 nor M2 are backed by the gold stock. Statement D is false because M2 is a broader category that includes M1, not the other way around.

Which Statement Is TRUE