M2

Definition

M2 is a measure of the money supply that includes all elements of M1 (cash and checking deposits) plus savings deposits, money market securities, mutual funds, and other time deposits. It provides a broader understanding of the amount of money circulating in the economy and available for spending.

Related terms

M1:

The most liquid portion of the money supply, including cash and assets that can quickly be converted to cash.

Money Market Fund: A type of mutual fund designed for those who want to earn interest on their cash reserves while maintaining a high level of liquidity.

Time Deposit: A bank deposit with a fixed term or period of maturity, often earning higher interest rates than savings accounts but requiring that funds stay deposited for a specific period