Question

Items
1. Money market mutual funds held by individuals
2. Savings deposits, including money market deposit accounts
3. Money market mutual funds held by businesses
4. Currency held by the public
5. Small time deposits
6. Checkable deposits Refer to the accompanying list.
Which items are included in the M2 money supply but not the M1 money supply?

Answer 1

Answer: The answer is as follows:

Explanation:

M1 = Currency with public + Checkable deposits + Other deposits with RBI

M2 = M1 + Post office savings deposits

Currency held by the public and Checkable deposits are the components of M1.

Whereas savings deposits, Money market mutual funds held by individuals and Small time deposits are the components of M2.

We know that all the components of M1 are also the components M2.

∴ The items are included in the M2 money supply but not the M1 money supply are as follows:

Item 1 - Money market mutual funds held by individuals

Item 2- Savings deposits, including money market deposit accounts

Item 5 - Small time deposits