A certificate of deposit would be counted in which measure of money?
A) M1
B) M2
C) The monetary base
D) Both M1 and M2

Question

Quizplus · Accepted Answer

Certificates of deposit (CDs) are counted in M2, which includes M1 (cash, demand deposits, and traveler's checks) as well as certain types of savings deposits, time deposits, and money market funds. CDs are considered time deposits because they have a fixed term and withdrawal penalties if the funds are accessed before the maturity date. Therefore, CDs are not included in M1, which only includes the most liquid forms of money.

A Certificate of Deposit Would Be Counted in Which Measure