Money Supply (M1, M2, M3)

Money Supply refers to the total amount of monetary assets available in an economy at a given time, classified into three broad categories. M1 includes the most liquid forms—currency in circulation and demand deposits. M2 adds savings deposits, time deposits, and money market funds. M3 is the broadest measure, incorporating large-denomination deposits and institutional money funds. The Reserve Bank of India (RBI) monitors these aggregates closely, as changes in money supply directly influence inflation, interest rates, and overall economic activity.