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Identify whether each of the following examples belongs in M1 or M2. If an example belongs in both, be sure to check both boxes. Example M1 M2 Larry has $25,000 in a money market account. Felix has a roll of quarters that he just withdrew from the bank to do laundry. Megan has $8,000 in a two-year certificate of deposit (CD).

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Answer

Given that:

The Boxes are M1 and M2

The Larry has $25,000 in a money in the market.

Megan has $8,000 in a 2 year certificate of deposit.

Felix has a roll of quaters.

 M1 = Currency circulation + checks of traveller + balance of transaction account.

 M2 = M1 + saving account which is small + funds of money market + deposits for small time + other deposits.

1st Example:  M1 & M2 both. Because here money is circulating from bank to laundry. This is the condition of M1 and M2 also includes M1. Hence M1 and M2 both are correct for this example .

2nd Example:    M2. Because here $25000 is a fund of money market which is the condition of M2.

3rd Example:  M2. Because here $8000 is a certificate deposit for 2 years. All small time period deposits are the condition of M2.

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