ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -M1 is the most narrow definition of the money supply. It includes coins and currency in circulation-in other words they are not held held by the U.S. Treasury, or the Federal Reserve Bank, but circulate in the economy. Closely related to currency are checkable deposits, also known as demand deposits .

Detailed explanation-2: -Definition of. Narrow money (M1) M1 includes currency i.e. banknotes and coins, plus overnight deposits. M1 is expressed as a seasonally adjusted index based on 2015=100.

Detailed explanation-3: -What Is M1? M1 is the money supply that is composed of currency, demand deposits, other liquid deposits-which includes savings deposits. M1 includes the most liquid portions of the money supply because it contains currency and assets that either are or can be quickly converted to cash.

Detailed explanation-4: -M1 money supply includes those monies that are very liquid such as cash, checkable (demand) deposits, and traveler’s checks.

Detailed explanation-5: -Beginning in May 2020, the Federal Reserve changed the definition of both M1 and M2. The biggest change is that savings moved to be part of M1. M1 money supply now includes cash, checkable (demand) deposits, and savings.