Money & Banking
Money supply (M2)
The money supply measures the total stock of money circulating in an economy; M2 — the most commonly cited measure — includes cash, checking deposits, and easily-converted near-money like savings accounts and small time deposits. Rapid M2 growth without matching output growth is a classic precursor to inflation.
Why it matters
Watch M2 growth alongside the inflation-rate series to judge whether monetary conditions are loosening or tightening.
Also known as: M2, broad money