What are the measures of money supply Class 12?

What are the measures of money supply Class 12?

Measures of Money Supply OD = other deposits held by the public with Reserve Bank of India. Money Supply M2: M2 is a broader concept of money supply in India than M1. In addition to the three items of M1, the concept of money supply M2 includes savings deposits with the post office savings banks.

What is M1 M2 M3 M4?

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 the best measure of money supply?

The M3 classification is the broadest measure of an economy’s money supply. It emphasizes money as a store-of-value more so than as a medium of exchange, hence the inclusion of less-liquid assets in M3.

What is M0 M1 M2 M3 money supply?

Central bank money (M0)- obligations of a central bank, including currency and central bank depository accounts. Commercial bank money (M1-M3) – obligations of commercial banks, including current accounts and savings accounts.

What are the three measures of money?

There are three measures of money supply M1, M2, and M3. M1 includes all currency in circulation, traveler’s checks, demand deposits at commercial banks held by the public, and other checkable deposits.

What is money supply in economics class 12?

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.

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 are the 3 measures of money?

What is measuring money?

Money is measured with several definitions: M1 includes currency and money in checking accounts (demand deposits). Traveler’s checks are also a component of M1, but are declining in use. M2 includes all of M1, plus savings deposits, time deposits like certificates of deposit, and money market funds.

What are the measures of money supply in India?

Instead, the Reserve Bank of India has developed four alternative measures of money supply in India. These four alternative measures of money supply are labelled M1, M2, M3 and M4. The RBI will collect data and calculate and publish figures of all the four measures.

Which measures of money supply is known as narrow measure of money supply?

Narrow money refers to a category of money supply that includes all the real money held by the central bank. It includes coins and currency, demand deposits, and other liquid assets. Narrow money in the US is known as M1 (M0 + demand accounts).

What is measurement of money?

The money measurement concept (also called monetary measurement concept) underlines the fact that in accounting and economics generally, every recorded event or transaction is measured in terms of money, the local currency monetary unit of measure.