M₂, is one of the measures of money supply. M₂ is the sum of M₁+ ______.

Question

Question

This question was previously asked in

SSC CGL 2023 Tier-I Official Paper (Held On: 18 Jul 2023 Shift 1)

Answer 1

The correct answer is saving deposits with post office.

Key Points

M₂ includes all components of M₁ (which comprises currency in the hands of the public and demand deposits, or other liquid deposits), plus savings deposits (including money market deposit accounts), small-denomination time deposits (certificates of deposit, or CDs, of under $100,000), and retail (small-denomination) money market mutual fund shares.
These elements are seen as "near money" and can be readily converted to cash, therefore, they are included in the broader measure of the money supply known as M₂.
Post office savings are included as they are a type of savings deposit. National Saving Certificates, coins and currency notes, and demand deposits are not added to M₁ to get M₂, as these are either already accounted for in M₁ or are different form of savings assets.
Please note that exact components of M₂ may vary slightly between different countries depending on their banking and financial systems.