One difference between the assets included in M1 and those added to calculate M2 is that items in M1 are
A) better stores of value than those added to compute M2.
B) more liquid than those added to compute M2.
C) less liquid than those added to compute M2.
D) larger than those added to compute M2.

Question

Quizplus · Accepted Answer

Items included in M1 (currency, demand deposits, traveler's checks) are considered to be more liquid than the assets added to calculate M2 (savings deposits, small time deposits, and money market mutual funds). Liquidity refers to how easily an asset can be converted into cash without significant loss of value.

One Difference Between the Assets Included in M1 and Those