How are demand deposits treated in M1 as compared to M2?
A)They are included in M1 but not M2.
B)They are included in M2 but not M1.
C)They are included in M1 and M2.
D)They are included in neither M1 nor M2.

Question

Quizplus · Accepted Answer

Demand deposits are included in both M1 and M2. M1 includes the most liquid assets, such as currency and demand deposits, while M2 includes M1 plus assets that are less liquid, such as savings deposits and small time deposits.

How Are Demand Deposits Treated in M1 as Compared to M2