ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The money supply includes all cash in circulation and all bank deposits that the account holder can easily convert to cash. Governments issue paper currency and coins through their central banks or treasuries, or a combination of both.

Detailed explanation-2: -US M2 Money Supply is at a current level of 21.27T, up from 21.24T last month and down from 21.64T one year ago. This is a change of 0.15% from last month and-1.73% from one year ago.

Detailed explanation-3: -Fiat money is money that some authority, generally a government, has ordered to be accepted as a medium of exchange. The currency-paper money and coins-used in the United States today is fiat money; it has no value other than its use as money.

Detailed explanation-4: -What Is the Money Supply? The U.S. money supply comprises currency-dollar bills and coins issued by the Federal Reserve System and the U.S. Treasury-and various kinds of deposits held by the public at commercial banks and other depository institutions such as thrifts and credit unions.

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.