Final answer:
The narrowest definition of money used by economists is the M1 money supply, which includes the most liquid assets like currency and checking accounts.
Step-by-step explanation:
The narrowest definition of money used by economists is M1 money supply. M1 is referred to as narrow money because it represents the most liquid assets that can be readily used for transactions. It includes forms of money such as currency in circulation—cash you have on hand—and checking accounts in banks, as well as traveler's checks to a lesser extent. It's contrasted with broader definitions of money, such as M2 and M3, which include less liquid assets.
Money's primary functions include serving as a medium of exchange, a unit of account, and a store of value. In terms of liquidity, cash is highly liquid, as you can directly use it to purchase goods and services, like buying a hamburger for lunch. However, some assets that fall under broader money supply definitions, such as savings accounts, are less liquid because they require additional steps to convert into cash for transactions.