In deﬁning money as M1, economists exclude time deposits because

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Time deposits, such as certificates of deposit (CDs), are not directly or immediately a medium of exchange. They cannot be used for purchases or transactions without first being converted to cash or transferred to a checking account. Checkable deposits and currency, on the other hand, are readily available as a medium of exchange. Therefore, economists only include checkable deposits and currency in the definition of M1, as they are more directly related to the money supply and circulation in the economy.

In Deﬁning Money as M1, Economists Exclude Time Deposits Because