The main difference between M1 and M2 is that:
A) M1 includes some less liquid assets in addition to the assets in M2.
B) M1 includes more liquid assets in addition to the assets in M2.
C) M2 includes some less liquid assets in addition to the assets in M1.
D) M2 includes more liquid assets in addition to the assets in M1.

Question

Quizplus · Accepted Answer

M2 includes all the assets in M1 (such as cash, checking deposits, and traveler's checks) but also includes some relatively less liquid assets such as small denomination time deposits (CDs) and savings deposits. Therefore, option C is the correct answer.

The Main Difference Between M1 and M2 Is That