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Money supply

The money supply is the total amount of currency, checking deposits, and savings in the economy.

Expanded Definition

The money supply can be broken down into categories, including:

  • M1 = Circulating currency that's immediately available to purchase goods and services: cash, checking accounts, travelers checks ...
  • M2 = M1 plus deposits or balances -- such as savings accounts or money markets -- that can quickly be converted into the M1 category.
  • M3 = M2 plus money that can't be accessed immediately, such as that held by institutions.

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