What is the meaning of broad money?

What is the meaning of broad money?

What Is Broad Money? Broad money is a category for measuring the amount of money circulating in an economy. It is defined as the most inclusive method of calculating a given country’s money supply, and includes narrow money along with other assets that can be easily converted into cash to buy goods and services.

Which is known as broad money?

Broad money is the definition of the Money Supply which includes a wide scope for the definition of money – including both notes and coins, but also more illiquid forms of money – such as bank deposits, treasury bills, gilts. Broad money can also include Treasury Bills and gilts.

What is the difference between narrow and broad money?

Typically, “broad money” refers to M2, M3, and/or M4. The term “narrow money” typically covers the most liquid forms of money, i.e. currency (banknotes and coins) as well as bank-account balances that can immediately be converted into currency or used for cashless payments (overnight deposits, checking accounts, etc).

What are the components of broad money?

Components of Broad money- Currency with the public, demand deposits with the banking system and other deposits with the RBI (M-1), time liabilities portion of Saving deposits with the Banking System, Certificate of Deposit issued by banks and term deposits with a maturity up to and one year with the banking system.

What is M4 broad money?

Broad money e.g. M4 money supply is defined as a measure of notes and coins in circulation (M0) + bank accounts. It is a broader definition because it includes bank accounts and not just notes and coins in circulation.

What is narrow and broad definition of money based on?

Narrow definition of money is based upon its medium of payment function of money. It includes currency and demand deposits of banks. M1 and M2 are known as narrow money. Broad definition of money is based upon store of value function of money.

Which is called narrow money?

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). In the UK, M0 is referred to as narrow money.

What is the narrow concept of money?

Narrow money is a category of money supply that includes all physical money such as coins and currency, demand deposits and other liquid assets held by the central bank. In the United States, narrow money is classified as M1 (M0 + demand accounts).

What are the 6 characteristics of money?

The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability.

What are the evils of money?

The economic defects are as under:

  • (1) Instability in the Value of Money: ADVERTISEMENTS:
  • (2) Unequal Distribution of Wealth and Income:
  • (3) Growth of Monopolies:
  • (4) Wastage of Resources:
  • (5) Black Money:
  • (6) Cyclical Fluctuations:
  • (2) Political Instability:
  • (3) Tendency to Exploit:

What are the benefits of money?

Advantages of Money: 8 Important Advantages of Money– Explained!

  • Money has overcome drawbacks of barter system.
  • It facilitates exchange of goods and services and helps in carrying on trade smoothly.
  • Money helps in maximising consumers’ satisfaction and producers’ profit.
  • Money promotes specialisation which increases productivity and efficiency.