Money Supply Calculator
Calculate the money supply using M1, M2, and M3 definitions. Money supply measures the total amount of monetary assets available in an economy at a specific time.
M1 Components (Currency + Demand Deposits)
M2 Additional Components (M1 + Near Money)
M3 Additional Components (M2 + Large Time Deposits)
Money Supply Results
M1 Money Supply:
$0.00
M2 Money Supply:
$0.00
M3 Money Supply:
$0.00
Money Supply Analysis
M1 as % of M2:
0.00%
M2 as % of M3:
0.00%
Liquidity Ranking:
N/A
Economic Implications
Monetary Policy Tool:
N/A
Inflation Indicator:
N/A
Economic Activity:
N/A
Understanding Money Supply
Money supply refers to the total amount of monetary assets available in an economy at a specific time. It is typically measured using different monetary aggregates (M1, M2, M3) that include various types of money and near-money assets.
Money Supply Definitions
M1 Money Supply
- Currency in circulation
- Demand deposits (checking accounts)
- Traveler's checks
- Most liquid form of money
- Used for transactions
M2 Money Supply
- M1 plus near money
- Savings deposits
- Small time deposits
- Retail money market funds
- Less liquid than M1
M3 Money Supply
- M2 plus large time deposits
- Institutional money market funds
- Repurchase agreements
- Eurodollars
- Least liquid of the three
Components of Money Supply
Building Blocks of Money Supply
Transaction Money (M1)
- Currency: Physical money in circulation
- Demand deposits: Checking account balances
- Used for everyday transactions
- Highest liquidity
Near Money (M2 - M1)
- Savings deposits: Interest-bearing accounts
- Time deposits: Certificates of deposit
- Money market funds: Mutual fund shares
- Easily convertible to M1
Broader Money (M3 - M2)
- Large time deposits: Wholesale CDs
- Institutional money funds: Business holdings
- Lower liquidity but still monetary assets
- Used by large institutions
Money Supply and Monetary Policy
| Monetary Aggregate | Central Bank Control | Policy Relevance | Economic Impact |
|---|---|---|---|
| M1 | High direct control | Transaction demand | Short-term economic activity |
| M2 | Moderate control | Savings and investment | Medium-term growth |
| M3 | Limited control | Broad financial conditions | Long-term financial stability |
Money Supply and the Economy
Quantity Theory of Money
- MV = PY (Money × Velocity = Price × Output)
- Money supply affects price levels
- Inflation related to money growth
- Central bank money control
Money Demand
- Transaction demand: For purchases
- Precautionary demand: For emergencies
- Speculative demand: For investments
- Interest rate sensitivity
Money Supply Measurement Challenges
Definition Issues
- What counts as money?
- Digital currencies and crypto
- Cross-border flows
- Financial innovation
Measurement Problems
- Underground economy
- Timely data availability
- Seasonal variations
- Revisions and adjustments
Key Takeaways for Money Supply Calculator
- Money supply is measured using M1, M2, and M3 aggregates with different liquidity levels
- M1 includes the most liquid assets used for transactions
- M2 adds near money that can be easily converted to M1
- M3 includes the broadest range of monetary assets
- Central banks monitor money supply to implement monetary policy
- Money supply growth can influence inflation and economic activity
- The calculator helps understand the composition of monetary aggregates
- Use the calculator to analyze how different components contribute to total money supply