What is M1 M2 and M3 money supply?

What is M1 M2 and M3 money supply?

M1, M2 and M3 are measurements of the United States money supply, known as the money aggregates. M1 includes money in circulation plus checkable deposits in banks. M2 includes M1 plus savings deposits (less than $100,000) and money market mutual funds. M3 includes M2 plus large time deposits in banks.

What is M1 M2 M3 and M4 in economics?

M1 and M2 are known as narrow money. M3 and M4 are known as broad money. M1 is most liquid and easiest for transactions whereas M4 is least liquid of all. M3 is the most commonly used measure of money supply. It is also known as aggregate monetary resources.

What is M1 and M2 money supply?

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.

What is M3 money supply?

M3 is a collection of the money supply that includes M2 money as well as large time deposits, institutional money market funds, short-term repurchase agreements, and larger liquid funds. M3 is closely associated with larger financial institutions and corporations than with small businesses and individuals.

What is money and money supply?

The money supply is the total amount of money—cash, coins, and balances in bank accounts—in circulation. For example, U.S. currency and balances held in checking accounts and savings accounts are included in many measures of the money supply.

What is Mo in money supply?

M0 refers to the most liquid form of money: cash. That includes central bank notes and coins. MB refers to the base money supply from which banks can extend the money supply. In addition to M0, that also includes central bank deposits, which can’t be used to pay anyone other than banks.

What includes money supply?

The money supply includes coin, currency, and demand deposits (checking accounts). Some economists consider time and savings deposits to be part of the money supply because such deposits can be managed by governmental action and are involved in aggregate economic activity.

What does money supply Class 12 mean?

Money supply: The volume of money held by the public at a point of time, in an economy, is referred to as the money supply. Money supply is a stock concept.

Is M2 A money supply?

M2 is a measure of the money supply that includes cash, checking deposits, and easily convertible near money. M2 is a broader measure of the money supply than M1, which just includes cash and checking deposits.

What are components of money supply?

What are the components of the money supply?

  • Currency such as notes and coins with the people.
  • Demand deposits with the banks such as savings and current account.
  • Time deposit with the bank such as Fixed deposit and recurring deposit.

What are the different measures of money supply?

Measures of Money Supply : M0, M1, M2, M3 and M4

  • Reserve Money (M0): It is also known as High-Powered Money, monetary base, base money etc.
  • Narrow Money (M1):
  • M2 = M1 + Savings deposits of post office savings banks.
  • Broad Money (M3)
  • M4 = M3 + All deposits with post office savings banks.