All transaction deposits are included in
A) M1 only.
B) M2 only.
C) both M1 and M2.
D) savings balances only.

Question

Quizplus · Accepted Answer

Both M1 and M2 include transaction deposits, which are deposits in checking accounts that can be easily accessed and used for transactions. M1 includes only the most liquid forms of money, while M2 includes M1 plus slightly less liquid forms of money, such as savings deposits and money market mutual funds. Therefore, transaction deposits are included in both M1 and M2.

All Transaction Deposits Are Included in