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Identify whether each of the following examples belongs in M1 or M2. If an example belongs in both, be sure to check both boxes.

Example M1 M2
Clancy has $25,000 in a money market account.
Alex has a roll of quarters that he just withdrew from the bank to do laundry.
Eileen has $8,000 in a two-year certificate of deposit (CD).

User Tarik
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1 Answer

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Answer: a. M2 money supply

b. M1 and M2

c. M2 money supply

Step-by-step explanation:

M1 is the money supply which consist of the physical currency, coin, travelers check, demand deposits, checkable deposits.

M2 is the money supply which consists of checking deposits, cash, convertible near money.

Based on the above description of M1 and.M2 money supply, the following questions are answered below.

a. Clancy has $25,000 in a money market account.

It is included in the M2 money supply.

b. Alex has a roll of quarters that he just withdrew from the bank to do laundry.

This will be included in both the M1 money supply and the M2 money supply.

c. Eileen has $8,000 in a two-year certificate of deposit (CD).

It is included in the M2 money supply.

User Dasith Wijes
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