M2 (idea)

M2 is a measure of money. M2 is defined as all money that easily stores value with little cost to convert to M1. M2 is basically all money that has an exact value in currency (such as US dollars) and can be easily exchanged for that value. M2 is made up of the following:

• M1 — M1 can easily be exchanged also hold value relatively well. It is made of:
  • Currency
  • Demand deposits
  • Travellers' checks
• Savings deposits —
• Small-denomination time deposits — time deposits under $100,000 in value.
• Money Market Deposit Accounts
• Overnight Repurchase Agreements at Commercial Banks
• Overnight Eurodollars — dollar-denominated deposits in financial institutions abroad
• Money Market Mutual Fund Balances — mutual funds investing in short-term bonds that usually allow check-writing privileges