Measuring Money

Monetary Aggregate = M0 + M1 + M2 + M3

M0=
 Notes in Circulation +
 Coins in Circulation +
 Currency in Bank Vault

1
 Measuring Money

M1: Measure of the money supply that includes

only the most liquid (spendable) forms of money

M1=
 M0 +
 Demand Deposits +
 Other Checkable

2
 Measuring Money

M2: Measure of the money supply that includes

all the components of M1 plus the forms of
money that can be easily converted into
spendable form.

M2 =
 M1 +
 Saving Deposits
 Time Deposits

3
 Measuring Money

M3 =
 M2 +
 Other reserves