Final answer:
The component not included in the M2 money supply is large time deposits of more than $100,000. M2 consists of savings deposits, money market funds, and small time deposits under $100,000, which require more effort to access than M1 but are still relatively liquid.
Step-by-step explanation:
Direct answer: The part of M2 money supply that is not included is b. large time deposits of more than $100,000.Explanation: The M2 money supply includes various forms of money that are more liquid than just those found in M1. Specifically, M2 includes savings deposits, money market mutual fund shares, and small time deposits of less than $100,000. Savings deposits are a form of bank accounts that don't allow for direct writing of checks but allow for withdrawals at ATMs or banks. Money market mutual funds are pooled investments in safe, short-term instruments like government bonds.
Small certificates of deposit (CDs) or time deposits of less than about $100,000 are also included because they are accounts that have a set period before funds can be withdrawn, generally in exchange for a higher interest rate. These elements of M2 are considered less liquid than those in M1 and require more effort to spend. However, large time deposits that exceed $100,000 are not considered to be part of M2, as they fall into the category of what is generally known as M3, which encompasses more substantial and less-liquid financial assets.