M2 money supply includes which of the following in addition to M1? A. Foreign currency deposits B. Post office savings deposits C. Currency held by public D. Commercial paper
Question
M2 money supply includes which of the following in addition to M1? A. Foreign currency deposits B. Post office savings deposits C. Currency held by public D. Commercial paper
Solution
M2 money supply includes all elements of M1 money supply, which are currency held by the public, demand deposits, other checkable deposits, and traveler's checks. In addition to these, M2 includes:
A. Foreign currency deposits - This is not typically included in M2. Foreign currency deposits are usually not counted in a country's money supply as they are not in the local currency.
B. Post office savings deposits - Yes, these are included in M2. Post office savings deposits are a type of savings deposit, which are included in M2.
C. Currency held by public - This is included in M1, and since M2 includes everything in M1, it is also included in M2.
D. Commercial paper - No, commercial paper is not included in M2. Commercial paper is a short-term debt instrument issued by companies, and is not considered part of the money supply.
So, the correct answer to your question is B. Post office savings deposits and C. Currency held by public.
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