Savings deposits are not part of M1 but are included in M2. Therefore, the correct answer is c) not part of M1 but are part of M2.
To elaborate, M1 includes the most liquid forms of money, such as cash and checking deposits. These are easily accessible for transactions. On the other hand, M2 includes all of M1, plus savings deposits, time deposits, and other near-money assets that can be quickly converted into cash. Savings deposits, while not as liquid as checking accounts, can still be accessed relatively quickly, which is why they fall under M2 but not M1.