ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The money supply is the total amount of money(currency+deposit money) present in an economy at a particular point in time. The standard measures to define money usually include currency in circulation and demand deposits. The record of the total money supply is kept by the Central Bank of the country.

Detailed explanation-2: -The money supply is the total amount of money-cash, coins, and balances in bank accounts-in circulation. The money supply is commonly defined to be a group of safe assets that households and businesses can use to make payments or to hold as short-term investments.

Detailed explanation-3: -M3 is broad money. M3 = M1 + Time deposits with the banking system. M2 = M1 + Savings deposits of post office savings banks. M1 = Currency with public + Demand deposits with the Banking system (savings account, current account).

Detailed explanation-4: -Narrow money is also known as M1 and M2. Broad money means M3 and M4. The liquidity of these grades is decreasing. M1 is the most liquid and makes transactions the easiest, while M4 is the least liquid.

Detailed explanation-5: -M2 is a measure of the money supply that includes cash, checking deposits, and other types of deposits that are readily convertible to cash such as CDs. M1 is an estimate of cash and checking account deposits only. The weekly M2 and M1 numbers are closely monitored as indicators of the overall money supply.