2. Although most bank accounts pay some interest, depositors can get a higher interest rate by buying

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2. Although most bank accounts pay some interest, depositors can get a higher interest rate by buying a certificate of deposit, or CD. The difference between a CD and a checking account is that the depositor pays a penalty for withdrawing the money before the CD comes due—a period of months or even years.

Small CDs are counted in M2, but not in M1. Explain why they are not part of M1.

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Krugmans Economics For Ap

ISBN: 9781429218276

2nd Edition

Authors: Margaret Ray, David A. Anderson

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