Which category of money includes M1 as well as additional savings deposits and money market funds?

The category of money that includes M1 along with additional savings deposits and money market funds is M2. M1 consists of the most liquid forms of money, such as cash and checking account deposits, which can be quickly and easily used for transactions. In contrast, M2 encompasses M1 but extends to include near-money assets that are not as readily spendable but can be converted into cash or checking deposits relatively quickly.

Specifically, M2 includes savings accounts, time deposits, and money market funds. These instruments are important because they provide a broader view of the money supply in the economy, as they account for liquid assets that people can access relatively easily, even if they cannot be spent directly in transactions like currency can. This broader measure of money supply aids in understanding economic conditions and formulating monetary policy, making M2 a critical component of economic analysis.

Other categories, like M1, M3, and M4, represent different scopes of money supply, with M3 typically including larger deposits and institutional money market funds, while M4 is less commonly used in contemporary economic analysis. The definition and components of M2 help distinguish it as a more inclusive measure than M1, highlighting its role in the broader context of the economy's liquidity.