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What components of money do we count in M2?

a) Currency, demand deposits, and savings deposits
b) Currency, demand deposits, and time deposits
c) Currency, demand deposits, and money market mutual funds
d) Currency, demand deposits, and traveler's checks

User Rapt
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Final answer:

M2 money supply includes currency, demand deposits, as well as savings deposits, time deposits like certificates of deposit, and money market mutual funds.

Step-by-step explanation:

The components of money that are counted in the M2 money supply include all the components of M1 plus additional forms of money. Specifically, M2 includes currency, demand deposits (which is money in checking accounts), and also aggregates certain near monies. The near monies in M2 are savings deposits, time deposits like certificates of deposit, and balances in money market mutual funds. Therefore, the correct answer to which components are counted in M2 is: (c) Currency, demand deposits, and money market mutual funds.

User Andy Burns
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