The distinction between M1 and M2 is based on
A) portability-the ease with which an asset can be moved.
B) divisibility-the ease with which an asset can be used to make smaller payments.
C) liquidity-the ease with which an asset can be converted into cash.
D) storability-how long an asset will retain its value.

Question

Quizplus · Accepted Answer

The distinction between M1 and M2 is based on liquidity. M1 includes the most liquid forms of money such as currency, demand deposits, and traveler's checks, while M2 includes less liquid forms of money such as savings accounts, time deposits, and money market mutual funds.

The Distinction Between M1 and M2 Is Based on