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Money supply

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

Contents

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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