Broad money

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Broad money

In economics

Economics

File:Ballard Farmers' Market - vegetables.jpgEconomics is the Social sciences that studies the Production theory basics, Distribution , and Consumption of Good and Service ....
, broad money is the widest measurement of the money supply

Money supply

In economics, money supply, or money stock, is the total amount of money available in an economy at a particular point in time. There are several ways to define "money", but standard measures usually include currency in circulation and demand deposits....
. It is generally

"One measure of the money supply that includes M1, plus savings and small time deposits, overnight repos at commercial bank
Commercial bank

A commercial bank is a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits....
s, and non-institutional money market accounts. This is a key economic indicator
Economic indicator

An economic indicator is a statistic about the Economics. Economic indicators allow analysis of economic performance and predictions of future performance....
used to forecast inflation
Inflation

In economics, inflation is a rise in the general price level of goods and services in an economy over a period of time. The term "inflation" once referred to increases in the money supply ; however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflatio...
, since it is not as narrow as M1 and still relatively easy to track. All the components of M2 are very liquid, and the non-cash components can be converted into cash very easily."

However broad money can have different definitions depending on the situation of usage, usually it is constructed as required to be the most useful indicator in the situation.

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In economics

Economics

Money supply

"One measure of the money supply that includes M1, plus savings and small time deposits, overnight repos at commercial bank
Commercial bank

A commercial bank is a type of financial intermediary and a type of bank. Commercial banking is also known as business banking. It is a bank that provides checking accounts, savings accounts, and money market accounts and that accepts time deposits....
s, and non-institutional money market accounts. This is a key economic indicator
Economic indicator

An economic indicator is a statistic about the Economics. Economic indicators allow analysis of economic performance and predictions of future performance....
used to forecast inflation
Inflation

In economics, inflation is a rise in the general price level of goods and services in an economy over a period of time. The term "inflation" once referred to increases in the money supply ; however, economic debates about the relationship between money supply and price levels have led to its primary use today in describing price inflatio...
, since it is not as narrow as M1 and still relatively easy to track. All the components of M2 are very liquid, and the non-cash components can be converted into cash very easily."

However broad money can have different definitions depending on the situation of usage, usually it is constructed as required to be the most useful indicator in the situation. More generally, broad money is just a term for the least liquid money definition being considered and less a fixed definition across all situations. As such broad money may have different implications in the United States than it does in Australia, and even from academic paper to paper (Lim 2003). However, broad money will almost always be defined exactly before discussion, and when not it is usually sufficient to assume it is a very wide money definition.