Which measure of money supply is most liquid? Measurement of the Money Supply The Federal Reserve measures the U.S. money supply in three different ways: monetary base, M1, and M2. Money Supply Reserve Multiplier = 1 ÷ Reserve Requirement Ratio. currency plus checking account balances plus traveler's checks. M2 is a measure of the money supply that includes cash, checking deposits, and easily convertible near money. They are called demand deposits or checkable deposits because the banking institution must give the deposit holder his money “on demand” when a check is written or a debit card i… 37. Ans. more M1 Definition They are called demand deposits or checkable deposits because the banking institution must give the deposit holder his money “on demand” when a check is written or … Money Supply Measures. Each measure is briefly explained below. M1= currency with the public + demand deposits+ other deposit held with the R.B.I. M2 = M1 + Savings deposits of post office savings banks. (M1) 2020-10-19: 5,545.5 | Billions of Dollars | Weekly, Ending Monday | Updated: Oct 29, 2020. M1 money supply: $2,988.2: Savings accounts: $7,712.1: Time deposits: $509.2: Individual money market mutual fund balances: $610.8: Total M2: $11,820.3 (or $11.8 trillion) Narrow Money (M1): M1 = Currency with public + Demand deposits with the Banking system (current account, saving account) + Other deposits with RBI. The money multiplier is defined in various ways. Currency and Coins with Public: It consists of paper notes and coins held by the public. Reserve Ratio = 5.5% Therefore, the calculation of money multiplier will be as follows, Money Multiplier will be – =1 / 0.055 = 18.18 Hence, the money multiplier would be 18.18 M1 is the most narrow definition of the money supply. 1. B. currency plus checking account balances plus traveler's checks plus savings C. currency plus checking account balances. D) currency only currency plus demand deposits plus savings deposits. M3 = M1 + time deposit. If you ask someone who hasn't taken a course in economics to define the money supply, he or she is likely to say something like, the money supply equals the total amount of paper currency and coins in circulation. M1 Money Stock. The two most common measures of the quantity of liquidity---that is, the money supply---are M1, which equals cash plus demand deposits, and M2, which equals cash plus both demand and time deposits. The growth rate of M2 has been more stable than the growth rate of M1. M1 = Currency and Coins with public + demand deposits of Commercial banks + Other Deposits with RBI. currency plus checking account balances. For example, U.S. currency and balances held in checking accounts and savings accounts are included in many measures of the money supply. If you ask someone who hasn't taken a course in economics to define the money supply, he or she is likely to say something like, the money supply equals the total amount of paper currency and coins in circulation. Monetary base is the sum of currency in circulation and reserve balances (i.e., deposits held by banks and other depository institutions in their accounts at the Federal Reserve). For issue of notes, minimum reserve system is followed in India. Broad Money (M3) M3 = M1 + Time deposits with the banking system. currency plus checking account balances plus traveler's checks plus savings account balances. M1 money supply includes coins and currency in circulation—the coins and bills that circulate in an economy that are not held by the U.S. Treasury, at the Federal Reserve Bank, or in bank vaults. Closely related to currency are checkable deposits, also known as demand deposits. Including some types of savings deposits, the money supply totaled $3,272 billion. 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