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    The different measures of money supply

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    Explain the different measures of the money supply, and explain why the different definitions are important.

    © BrainMass Inc. brainmass.com October 10, 2019, 2:42 am ad1c9bdddf

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    These are the different measures of Money Supply:

    1. "M1"

    M1 consists of the most highly liquid assets. It includes all forms of assets that are easily exchangeable as payment for goods and services.
    These are:
    a.) coin and currency in circulation
    b.) traveler's checks
    c.) demand deposits
    d) Other checkable deposits.

    2. "M2"

    M1 it includes all of M1, the most liquid assets, and a collection of additional assets that are slightly less liquid.
    These additional assets include:
    a.) savings accounts
    b.) money market deposit accounts
    c.) small time deposits (less than $100,000) (these would include ...

    Solution Summary

    Money exists in different forms. This solutions identifies and defines the different measures of the money supply. It explains also why the different definitions of money are important.