The correct answer is D. M2 = M1 + deposit in post office savings account.
M1 is the narrowest definition of money, and includes currency in circulation, demand deposits, and other checkable deposits. M2 is a broader definition of money, and includes M1 plus savings deposits, small time deposits, and money market mutual fund balances. M3 is an even broader definition of money, and includes M2 plus large time deposits, institutional money market funds, and short-term repurchase agreements. M4 is the broadest definition of money, and includes M3 plus long-term repurchase agreements, overnight Eurodollars, and other near money assets.
Option A is correct because M4 is the sum of M3 and the total deposits of post offices. Option B is correct because M3 is the sum of M1 and the total deposits of banks. Option C is incorrect because M1 is not equal to M2 plus M3 plus M4. Option D is incorrect because M2 does not include deposits in post office savings accounts.