ECONOMICS (CBSE/UGC NET)

ECONOMICS

MONEY

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
M1 and M2 makeup all of this in the U.S. economy.
A
Fiat money
B
Representative money
C
Currency
D
Money supply
Explanation: 

Detailed explanation-1: -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.

Detailed explanation-2: -M2 consists of M1 plus (1) small-denomination time deposits (time deposits in amounts of less than $100, 000) less individual retirement account (IRA) and Keogh balances at depository institutions; and (2) balances in retail money market funds (MMFs) less IRA and Keogh balances at MMFs.

Detailed explanation-3: -The M2 money supply is a broader measure of money supply that includes all components of M1 as well as “near money". M2 includes savings deposits, money market securities, and other time deposits which are less liquid and not as suitable as exchange mediums.

There is 1 question to complete.