Final answer:
Examples given belong to different categories of money supply; Eleanor's CD is M2, Andrew's checking account is M1, and Darnell's savings account generally falls under M2. Understand the distinctions and overlapping features in M1 and M2 is crucial.
Step-by-step explanation:
To identify whether each of the following examples belongs in M1 or M2, it is important to understand the distinction between the two. M1 represents money that is readily accessible for transactions, while M2 includes all of M1 plus additional savings deposits, money market accounts, and other forms of near money.
Eleanor has $6,000 in a six-month certificate of deposit (CD). This falls under M2 because CDs are time deposits.
Andrew has $1,200 in a checking account. This is considered part of M1, as checking accounts are used for transactions.
Darnell has $2,000 in a savings account. This is generally considered as part of M2, though some savings accounts have check-writing abilities and ATM access, making them similar to transactional accounts.
The categories may seem clear cut, but there are nuances, and the lines can sometimes get blurry. The key is to understand the general concepts of what is included in M1 and M2 and their intended purposes in the economy.