ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -M1 money is a country’s basic money supply that’s used as a medium of exchange. M1 includes demand deposits and checking accounts, which are the most commonly used exchange mediums through the use of debit cards and ATMs. Of all the components of the money supply, M1 is defined the most narrowly.

Detailed explanation-2: -money supply, the liquid assets held by individuals and banks. The money supply includes coin, currency, and demand deposits (checking accounts).

Detailed explanation-3: -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-4: -Money supply includes the currency that is in circulation with the public at a particular point of time, hence it does not include the money held by government or commercial banks as it is not in circulation with the public at a a given point in time.

Detailed explanation-5: -Demand deposits refers to the deposits of the people which is held by the commercial banks which can be withdrawn on demand. These are included in M1 and M2 measurement of money supply as they are considered the liquid money supply in the economy.