Due to new methods of electronically transferring assets from savings accounts to checking accounts, many economists favor moving savings accounts from
A)M1 into M2.
B)M2 into M3.
C)M3 into M2.
D)M2 into M1.

Question

Quizplus · Accepted Answer

Savings accounts are typically part of M2, which includes M1 plus savings accounts and other near-money assets. If savings accounts can be easily transferred to checking accounts, they become more liquid and similar to the components of M1, which includes the most liquid forms of money like cash and checking deposits. Therefore, economists may favor moving them into M1.

Due to New Methods of Electronically Transferring Assets from Savings