What differentiates M1 from M2? A) M1 is a much broader definition of

QUESTION

What differentiates M1 from M2?

A) M1 is a much broader definition of the money supply than M2.
B) M2 includes only currency in its definition of the money supply.
C) M1 is the much more commonly used measure of the money supply.
D) M1 includes assets such as mutual funds and money market accounts.
E) Transactions must be made before some forms of M2 assets can be used in ways that resemble virtually all M1 money.

ANSWER

Answer: E
Explanation: E) M1 is the much narrower definition of the money supply. M2 includes all of M1 plus funds that take longer to access. M2 is the much more commonly used measure.