Refer to the table the value of money included in M2 but not counted in M1 is (A

Question

Refer to the table the value of money included in M2 but not counted in M1 is (A) $1,457 billion (B) $4,442 billion (C) $2,886 billion (D) $3,845 billion Take Test: Econ 212 Fira × + jsp?course-assessment-id·1087589-1 &course-ide;_1405554_1&content;,id.-3328a373 Remaining Time: 35 minutes, 17 seconds. Question Completion Status 0 C 8 percent O D.14 percont QUESTION 39 TEM Billions of Dollars $597 818 639 Checkable Deposits (DD) Small Time Deposits (TD) Currency Money Market Mutual Funds Held by Business (MMME) Savings Doposits (SD) Money Market Mutual Funds Held by Individuals (MMMF) 1.046 2.866 979 Refer to the table above The size of the M1 (Money Supply) is A 5979 bilion - B $1.236 billion 0 144 8 3

Explanation / Answer

M1 includes cash and checking deposits which are totally liquid. M2 includes M1 and "near money" which means assets which can be converted into cash easily and quickly. For ex. savings deposits, mutual funds, securities, time dposits etc. But due to features like drawing of cheques and ATMs savings deposits are also now considered as M1 money supply.

In this M2 but not M1 components are:- Savings deposits and money market mutual funds held by individuals. = 2866+979 = $3,845

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