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30 June, 01:09

The M2 definition of the money supply includes

A. M1, savings accounts, small time deposits, and money markets.

B. savings accounts, mutual funds, small time deposits, and credit cards.

C. M1, savings accounts, small time deposits, money markets, and credit cards.

D. M1, savings accounts, mutual funds, and credit cards.

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Answers (1)
  1. 30 June, 02:08
    0
    The correct answer is option A.

    Explanation:

    The M1 definition of money includes the currency notes and coins in circulation and demand deposits in bank. This is the most liquid and is termed as narrow definition of money.

    The M2 definition includes all the components of M1 and along with that, savings accounts, time deposits and money market funds. This a less liquid supply of money.
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