Question

\(M_1\) and \(M_2\) are known as \(\underline{\hspace{2cm}}\) money.

Hint:

Broad money includes both narrow money (liquid forms) and less liquid assets such as savings deposits.

Answer 1

Step 1: Understanding money supply.
\( M_1 \) represents the narrow money supply, which includes currency and demand deposits. \( M_2 \) includes \( M_1 \) plus savings deposits, making it a broader measure of money supply.

Step 2: Conclusion.
Thus, the correct answer is Broad.