Question

Which of the following is part of the M2 definition of the money supply, but not...

Which of the following is part of the M2 definition of the money supply, but not part of M1?

a. Checkable deposits

b. Currency held in banks

c. Currency in circulation

d. Money market mutual fund shares

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Answer #1

Ml includes currency and checkable deposits.

So checkable checks, currency in circulation and currency held in banks ( checkable deposits) comes under M1.

And M2 includes M1 plus near monies. Near monies are savings deposits and small time deposits.

So a money market mutual fund is the item in M2 but not in M1.

Hence the correct answer is ‘D’.

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