Which measure includes both checking accounts and savings accounts?
A. M0
B. M1
C. M2
D. M3
Answer (2)
The correct answer is letter C. M2M1 includes coins, bills, and checking accounts—used for daily transactions. M2 includes everything in M1 plus savings accounts, time deposits, and money market funds. M2 is a bigger measure and is used as a “store of value.”
The correct answer is: C. M2.Explanation for the Other Choices M0 - The most liquid form of money, including only physical currency (coins and paper money) in circulation.M1 - Includes M0 plus demand deposits (like checking accounts) and other checkable deposits. It's money that can be accessed easily for transactions.M2 - Includes everything in M1 plus savings accounts, time deposits under $100,000, and money market mutual funds. These are slightly less liquid than M1 components.M3 - Includes M2 plus large time deposits, institutional money market funds, and other larger liquid assets (Note: M3 is no longer reported in the U.S. since 2006).
