The Federal Reserve's M2 definition of the money supply includes all physical currency, checking account deposits, traveler's checks, money market mutual fund balances, and other time deposits.
M2 growth is a key indicator of future inflationary pressure in the economy. If M2 growth is too high, it can lead to inflationary pressures in the economy. The Federal Reserve attempts to control M2 growth through monetary policy.
Is M2 narrow money?
M2 is a measure of the money supply that includes cash, checking deposits, money market investments, and other short-term investments. It is considered a narrow measure of the money supply because it excludes other types of assets, such as bonds and stocks.
What is M0 M1 and M2? M0 refers to the base money supply in an economy, which consists of physical currency (notes and coins) and reserves held by commercial banks at the central bank.
M1 refers to the money supply in an economy that includes M0 plus other liquid assets such as checking account deposits and money market funds.
M2 refers to the money supply in an economy that includes M1 plus other less liquid assets such as savings account deposits and small time deposits. What is M2 inflation? M2 inflation is the increase in the money supply that results from the excess reserves of banks being used to purchase assets such as government bonds. This increase in the money supply can lead to inflationary pressures in the economy.
What is M1 and M2 definition? M1 and M2 are definitions of the money supply. M1 includes all physical money, such as coins and paper bills, as well as checking account balances and traveler's checks. M2 includes all of the components of M1, plus savings accounts, money market mutual funds, and other less-liquid assets. What components of money are counted in M2? M2 is a measure of the money supply that includes cash, checking deposits, money market mutual funds, and other short-term investments that are easily convertible into cash.