Question

Currency held outside banks is $200 billion, money market mutual funds (retail) are $10 billion, small-denomination time deposits are $30 million, and saving deposits (including money market deposit accounts) are $220 billion. How much does M2 equal

Answer 1

M2 = $470 billion.

Step-by-step explanation:

M2 = Currency + Money market mutual fund + Time deposits + Saving deposits

M2 = 200 billion + 10 billion + 40 billion + 220 billion

M2 = $470 billion.

M2 is a calculation of the money supply that includes all elements of M1 as well as "near money"