ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The following are NOT part of M1: currency in banks. currency and checkable deposits owned by the government. currency and checkable deposits owned by the Federal Reserve Banks.

Detailed explanation-2: -M1, M2 and M3 are measurements of the United States money supply, known as the money aggregates. M1 includes money in circulation plus checkable deposits in banks. M2 includes M1 plus savings deposits (less than $100, 000) and money market mutual funds.

Detailed explanation-3: -The correct option is c): Savings deposits. From the formula, it is clear that the above components do not include savings deposits as it is categorized as financial assets. Thus, they are not included in M1.

Detailed explanation-4: -M2 is a measure of the U.S. money stock that includes M1 (currency and coins held by the non-bank public, checkable deposits, and travelers’ checks) plus savings deposits (including money market deposit accounts), small time deposits under $100, 000, and shares in retail money market mutual funds.