Money can be defined as any medium which facilitates the exchange of goods and services between people. M1 includes all currency in circulation, travelers checks, demand deposits at commercial banks held by the public, and. In this lesson, we also look at the money supply in terms of function and liquidity. Money supply is defined as the total quantity of money circulating in the economy at a particular time. M2 is a measure of the money supply that includes all elements of m1 as well as near money. The four measures of money supply represent different degrees of liquidity, with m 1 being the most liquid and m 4 being the least liquid. There are four measures of money supply in india which are denoted by m1, m2, m3 and m4. M 1 is widely used as a measure of money supply and it is also known as aggregate monetary resources of the general public.
Exchange has taken on different forms throughout history, starting with the barter system in the earliest centuries, where commodities were directly exchanged for each other. M2 in nigeria and ghana is the broad money supply which measures the total. The federal reserve in the united states measures and publishes the. Hence, we can say that nature of money is one that facilitates exchange. The definition of money supply given above represents a narrow measure of money supply and is generally described as m 1. Class xii economics notes money and supply of money. There are three measures of money supply m1, m2, and m3. From april 1977, the reserve bank of india has adopted four concepts of money supply in its analysis of the quantum of and variations in money supply. Money supply data is collected, recorded, and published periodically, typically by the countrys government or central bank. Spread the lovenature of money and evolution exchange is a way of life and money is an instrument that facilitates exchange.
The supply of money means the total stock of money paper notes, coins and demand deposits of bank in circulation which is held by the public at any particular point of time. M1 includes cash and checking deposits, while near money refers to savings deposits, money market. The measures of money supply in india are classified into four categories m1, m2, m3 and m4 along with m0. Many countries use it as an indicator of economic performance. These four concepts of measures of money supply are explained below.
Before money came into being, goods were exchanged for goods. M 1 and m 2 are generally known as narrow money supply concepts, whereas, m 3. Pdf definitions and measures of money supply in india. The total stock of money in circulation among the public at a particular point of time is called money supply. Pdf the effect of money supply in enhancing economic growth in nigeria and ghana is investigated in this study. Discover how the federal reserve defines the money supply by exploring the components of the money stock. The paper compiles in a nutshell all studies on definitions and measures of money supply in india in a chronological yet logically consistent manner in doing so, alternative measures of money. However, barter continue reading concept of money and money supply macroeconomics.
114 242 755 1226 677 355 426 1210 1381 180 782 1066 1162 427 900 679 911 1253 1309 1064 1354 23 58 1033 1157 1174 1253 932 1582 615 1010 783 801 1190 551 32 1261 1139 410