ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: The answer is C. money market accounts. The M1 money supply consists of the most liquid assets, that is, the assets that can quickly be converted into cash.

Detailed explanation-2: -M1 is a narrow measure of the money supply that includes currency, demand deposits, and other liquid deposits, including savings deposits. M1 does not include financial assets, such as bonds.

Detailed explanation-3: -M1 is a narrow measure of the money supply that includes physical currency, demand deposits, traveler’s checks, and other checkable deposits. M1 does not include financial assets, such as savings accounts, term deposits, and bonds.

Detailed explanation-4: -Traditionally, savings accounts, money market accounts and brokerage accounts weren’t included in M1, since you couldn’t spend the money in them immediately. However, more institutions are making such deposits accessible on demand, such as brokerage houses that allow you to write checks against your investments.

Detailed explanation-5: -M1 money supply includes those monies that are very liquid such as cash, checkable (demand) deposits, and traveler’s checks M2 money supply is less liquid in nature and includes M1 plus savings and time deposits, certificates of deposits, and money market funds.