Which of the following is TRUE of time deposits? A) They are bank fun

QUESTION

Which of the following is TRUE of time deposits?

A) They are bank funds that cannot be withdrawn without notice.
B) They are only included in M1’s definition of the money supply.
C) They are limited to $100,000 per depositor per bank.
D) They can only be held in federal banks.
E) They are no different than commercial money.

ANSWER

Answer: A
Explanation: A) Time deposits are bank funds that cannot be withdrawn without notice or transferred by check. They are counted as part of the money supply only in M2.