M2 includes M1 (which is currency in circulation, checking account deposits, and other liquid assets) plus savings account balances, money market deposit accounts in banks, small-denomination time deposits (certificates of deposit under $100,000), and noninstitutional money market fund shares. These are considered slightly less liquid than the components of M1 but still important parts of the money supply.

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M2 Includes M1 Plus

Question 64

Multiple Choice

M2 includes M1 plus

A) currency in circulation,checking account deposits in banks,and holdings of traveler's checks.
B) savings account balances,money market deposit accounts in banks,small-denomination time deposits,and noninstitutional money market fund shares.
C) checking account deposits,large-denomination time deposits,and noninstitutional money market fund shares.
D) currency in circulation,savings account balances,and small-denomination time deposits.

Correct Answer: