Which of the following definitions of the money supply includes only the most liquid forms of money?
A)M1
B)M2
C)savings deposits.
D)money market mutual deposits.

Question

Which of the following definitions of the money supply includes only the most liquid forms of money?
A)M1 
B)M2 
C)savings deposits.
D)money market mutual deposits.

Quizplus · Accepted Answer

M1 only includes the most liquid forms of money, such as physical currency, demand deposits, and traveler's checks. M2 includes M1 plus slightly less liquid forms of money, such as savings deposits, small time deposits, and money market mutual funds. Savings deposits and money market mutual deposits are part of M2, but not the most liquid forms of money.

Which of the Following Definitions of the Money Supply Includes