Which of the following is included in M2?

The inclusion of M2 encompasses a broader range of monetary assets compared to M1, making it a crucial concept in understanding the money supply. M2 includes everything in M1, which consists of the most liquid forms of money, such as physical currency and demand deposits, and adds to it certain types of savings accounts, time deposits (under a specific threshold), and other forms of near-money assets.

This broader definition reflects the ability to easily convert these additional assets into cash or checking deposits compared to long-term investments or more rigid forms of savings. By incorporating savings accounts and time deposits, M2 provides a more comprehensive measure of money available in an economy that can potentially influence spending and inflation patterns, thus serving as an essential indicator for economic analysis and policy decisions.

Understanding the components of M2 helps in grasping how liquidity in the economy can affect overall economic activity and monetary policy.