What is M-1 Money Supply?

M-1 money supply is a measure of the total amount of money available in an economy at a given time. It is considered a narrow measure of the money supply, as it only includes the most liquid forms of money, which are easily convertible into cash.

M-1 includes two components:

1. Currency in circulation: This includes the physical currency, such as paper bills and coins, that is circulating within the economy. It also includes the cash held by banks in their vaults.
2. Demand deposits: These are checking accounts, which are also known as transaction accounts. These are accounts that can be easily converted into cash, and they are often used to make payments or withdrawals.



M-1 is considered to be a more narrow measure of the money supply compared to other measures such as M-2, which includes savings deposits and other time deposits.

M-1 is closely watched by the Federal Reserve and other central banks as it is considered to be a good indicator of the economy's overall health and level of activity. It's also used to set monetary policies and make interest rate decisions. It's known as a monetary aggregate because it measures the amount of money in circulation.

To sum up, M-1 money supply is a measure of the most liquid forms of money in an economy, including currency in circulation and demand deposits. It is considered a narrow measure of the money supply, but it is closely watched by central banks as it is a good indicator of the economy's overall health.

History OF M-1 Money Supply

M-1 money supply is a measure of the total amount of money available in an economy at a given time, specifically, it includes the most liquid forms of money, such as currency in circulation and demand deposits. The concept of M-1 money supply dates back to the early days of monetary policy and economic analysis. The Federal Reserve, which is the central bank of the United States, began publishing data on the money supply in the 1920s as a way to understand the state of the economy and inform monetary policy decisions. M-1 money supply was first published by the Federal Reserve in the 1960s, and it has since been used as one of the key measures of the money supply in the United States, it's considered a narrow measure of the money supply but it's closely watched as a measure of the overall health of the economy.

economic

M-1 money supply is considered to be a key indicator of the overall health of the economy, providing insight into the level of economic activity, inflation, and other economic trends.

policy

M-1 money supply is used by central banks to inform monetary policy decisions, such as setting interest rates and controlling inflation.

Indicator

M-1 money supply is considered to be a short-term indicator of the economy, it gives a good understanding of the money available for transactions, which is important for tracking spending and consumption patterns.

transparency

The regular publication of M-1 money supply data by central banks provides transparency and allows the public to have a better understanding of the state of the economy. This can help to build trust in the central bank and the monetary policy it implements.