The term “money supply” refers to the total value of the money available in an economy at a given point in time. However, there are several ways to define and measure the amount of money available. Therefore, the means of measuring a money supply are typically classified as “M”s and fall along a spectrum from narrow to broad monetary aggregates. M2 is one of the terms used to define money when discussing money supply.
Specifically, M2 is a calculation of the money supply that includes all elements of M1 as well as "near money. M1 describes the money that is most immediately available, such as physical money, checkable deposits, and traveler’s checks. M2, is a slightly more broad definition for money in that the term also refers to "near money." Near money refers to savings deposits, money market securities, mutual funds, and other time deposits.
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