M2 consists of
A)M1 plus traveler's checks.
B)M1 plus saving deposits,small time deposits,and money market funds.
C)M1 plus checkable deposits.
D)M1 plus currency at the banks.
E)M1 plus Federal Reserve notes.

Question

Quizplus · Accepted Answer

M2 includes all the components of M1 plus additional assets like saving deposits, small time deposits, and money market funds. Therefore, option B is the correct answer. A includes only traveler's checks which is not enough to be classified as M2. C includes only checkable deposits which is an important part of M2 but not the complete picture. D includes only currency at the banks which is not enough to classify as M2. E includes only Federal Reserve notes which comprise most of the currency in circulation, but is not enough to classify as M2.

M2 Consists of