ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -M1 is the money supply that encompasses physical currency and coin, demand deposits, traveler’s checks, and other checkable 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: -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-4: -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-5: -Currency, printed notes, money in bank accounts, and other liquid assets make up circulating money. Narrow money is also known as M1 and M2. Broad money means M3 and M4.