Measuring the money supply

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Measuring the money supply
To measurethe moneysupply, we sum upassets to
the far rightof the liquidity spectrum
MostLiquid
Non-money assets
money
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M1
M1 includes

• Currency in circulation
• Demand deposits at commercial banks
• Travelers checks
• Other checkable deposits including NOW accounts,
  ATS accounts, and checkable deposits at credit
  unions and mutual savings banks

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M2
M2 includes M1 plus

• Savings deposits
• Small time deposits (less than 100,000)
• Retail money market mutual fund balances

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