M2

M2 is a measure of the money supply that includes M1 plus savings deposits, small time deposits, and money market mutual funds. It is a broader measure of the money supply than M1, which includes only currency and demand deposits. M2 is used by economists and policymakers to track the amount of money available in the economy and to make decisions about monetary policy.

M2 is calculated by adding M1 to savings deposits, small time deposits, and money market mutual funds. Savings deposits are deposits at banks and thrift institutions that are not subject to check. Small time deposits are deposits at banks and thrift institutions that are typically for a period of one to three years. Money market mutual funds are mutual funds that invest in short-term debt securities.

M2 is a broader measure of the money supply than M1 because it includes more types of deposits. M1 includes only currency and demand deposits, which are the most liquid forms of money. M2 includes savings deposits, small time deposits, and money market mutual funds, which are less liquid than currency and demand deposits.

M2 is used by economists and policymakers to track the amount of money available in the economy and to make decisions about monetary policy. Monetary policy is the use of interest rates and other tools by the central bank to influence the economy. The central bank uses monetary policy to try to achieve macroeconomic goals, such as low inflation, high employment, and economic growth.

M2 is a useful measure of the money supply because it includes a wide range of financial assets that are used for transactions and investment. M2 can be used to track the growth of the money supply and to make decisions about monetary policy.