Macroeconomics › Section N · Money and banking › Topic N.2
Measuring money: currency, M1, and M2
Cash in your wallet is clearly money, but what about your savings account, a certificate of deposit or your credit card? Economists answer by ranking assets on how easily they can be spent, and the Federal Reserve publishes two official measures, M1 and M2.
In this topic
- Where do you draw the line?
- Liquidity: the ranking principle
- M1: the narrow measure
- The 2020 redefinition
- M2: the broader measure
- Worked example: classifying one household's money
- How big are M1 and M2 today?
- Worked example: reading the money statistics
- Cards, transfers and what is not money
- Common mistakes to avoid
- Key takeaways
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