Which of the following best describes the M1 measure of the money stock?

Question

It is the M3 money measure minus the M2 money measure

M1 includes cash and medium-term deposits

M1 is cash plus demand deposits

M1 is the most comprehensive measure of money stock available

Answer 1

The statement that best describes the M1 measure of the money stock is:

M1 is cash plus demand deposits.

M1 primarily includes physical currency (cash) and demand deposits (checking accounts), which are easily accessible forms of money.