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What is the difference between the M1 and M2 money supply?
M1 is what is outside the banking system: Your cash, coins, your checking account. M2 is: All of M1 plus, savings accounts, money in banks, small time deposits...etc .
What does M1 include?
M1 includes the liquid components of the money supply. However, it does not currently include financial assets such as savings and checking accounts.
Are gift cards part of M1?
yes
What is supply of money currently held by public and commercial banks?
The U.S. money supply comprises currency-dollar bills and coins issued by the Federal Reserve System and the U.S. Treasury-and various kinds of deposits held by the public at commercial banks and other depository institutions such as thrifts and credit unions. On June 30, 2004, the money supply, measured as the sum of currency and checking account deposits, totaled $1,333 billion. Including some types of savings deposits, the money supply totaled $6,275 billion. An even broader measure totaled $9,275 billion.These measures correspond to three definitions of money that the Federal Reserve uses: M1, a narrow measure of money's function as a medium of exchange; M2, a broader measure that also reflects money's function as a store of value; and M3, a still broader measure that covers items that many regard as close substitutes for money.The definition of money has varied. For centuries, physical commodities, most commonly silver or gold, served as money. Later, when paper money and checkable deposits were introduced, they were convertible into commodity money. The abandonment of convertibility of money into a commodity since August 15, 1971, when President Richard M. Nixon discontinued converting U.S. dollars into gold at $35 per ounce, has made the monies of the United States and other countries into fiat money-money that national monetary authorities have the power to issue without legal constraints.
How much money is needed to buy a McDonald's franchise?
$200,000 in cash (M1)-note this does not include borrowed money.
Which is the most liquid measure of money supply?
M2. M2 consists of M1(coins, bills, travlers checks/checkable deposits), savings accts, money market accounts, demand deposits, and timed deposits. M2 is less narrow than M1, therefore being more liquid/spendable. *The Fed has defined three monetary aggregates M1, M2, and M3. The narrowest definition, M1, includes the transaction deposits of banks and cash in circulation. M2 adds savings accounts, small time deposits at banks, and retail money market funds. M3 adds large time deposits, repurchase agreements, Eurodollars, and institutional money market funds. In March 2006 the Fed discontinued tracking M3 because it does not convey information about economic activity that is not already embodied in M2
What is the difference between the M1 and M2 money supply?
M1 is what is outside the banking system: Your cash, coins, your checking account. M2 is: All of M1 plus, savings accounts, money in banks, small time deposits...etc .
What are differences between M1 money and M2 money?
M1 money is transaction money, It includes: Coins of all denominations, Paper money including all types of notes, Checking accounts and Traveler's checks. M2 money is M1 money plus Close substitutes ( savings accounts/deposits).
Explain the measures of money supply in India?
MEASURES OF MONEY SUPPLY IN INDIAThe Reserve Bank of India defines the monetary aggregates as:Reserve Money (M0): Currency in circulation + Bankers' deposits with the RBI + 'Other' deposits with the RBI = Net RBI credit to the Government + RBI credit to the commercial sector + RBI's claims on banks + RBI's net foreign assets + Government's currency liabilities to the public - RBI's net non-monetary liabilities.M1: Currency with the public + Deposit money of the public (Demand deposits with the banking system + 'Other' deposits with the RBI).M2: M1 + Savings deposits with Post office savings banks.M3: M1+ Time deposits with the banking system = Net bank credit to the Government + Bank credit to the commercial sector + Net foreign exchange assets of the banking sector + Government's currency liabilities to the public - Net non-monetary liabilities of the banking sector (Other than Time Deposits).M4: M3 + All deposits with post office savings banks (excluding National Savings Certificates).
When you add up currency demand deposits other checkable deposits and traverlers checks you get?
34% of the M1 money in the economy
What are some of the difficulties of carrying out monetary policy?
One problem is the difficulty in gathering and evaluating information about M1 and M2.Keeping track of the growth of M1 and M2 becomes more difficult as money is shifted from savings accounts into intrest-paying checkable accounts or from checkable accounts into money market deposits accounts.
What are the composition of the money supply?
M1 is coin and currency in circulation (M0), traveler's checks, demand deposits, and other checkable deposits.
What does M1 include?
M1 includes the liquid components of the money supply. However, it does not currently include financial assets such as savings and checking accounts.
Is currency held within banks part of m1 or m2?
Cash is part of M1.
What is m1 money and what does it contain?
M1 money (or any M#) is a measure of the money supply; the lower the number, the more narrow the definition of it is, and the more "liquid" the asset is. M1 contains M0, which is just paper currency and coins, and it also includes checking account/checkable deposits. It does not include saving deposits, which are found in M2.
Why is it difficult for the fed to gather and evaluate information about M1 and M2?
The money supply is measured in terms of M1 and M2. New savings and investment opportunities have appeared. Keeping track of the growth of M1 and M2 becomes more difficult as money is shifted from savings accounts into interest-paying checkable accounts.
Are gift cards part of M1?
yes
