AP MacroeconomicsMoney & Monetary Policy
M1 and M2
M1 and M2 are measures of the money supply; M1 is the most liquid money and M2 includes M1 plus less-liquid near-money.
M1 covers currency and checkable deposits. M2 adds savings deposits, small time deposits, and retail money market funds. M1 is used directly for transactions, while M2 captures money that can be spent after conversion.
Formula / Example
M2 = M1 + savings deposits + small time deposits + retail money market funds.
Interactive graph
Money Market →
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Study module
Monetary Policy →
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