Unformatted text preview: insurance agencies, certificate deposits etc. All these forms of money make up for the total supply of money. With the inclusion of some or more varieties of these kinds of money the total supply can be classified into four categories. These are as follows: M 1 = Total currency, coins and notes, checkable or current deposits M 2 = M 1 + Saving and fixed (time) deposits M 3 = M 2 + Insurance company and postal bank deposits M 4 = M 3 + very long-term deposits, certificate deposits etc. According to the context of this discussion, supply of money can be stated in terms of one or the other category. When monetary authority directly attempts to alter money supply or quantity then it is of M 1 the type. But generally, money supply is of the M 3 type....
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- Fall '10
- Monetary Policy, Federal Reserve System, bank deposits, long-term deposits