I. Related contents:
M2 is an indicator of broad money supply. In addition, MO, M 1, and reflect the actual purchasing power in the economy. If M2 grows rapidly, it means that investment and market are more active.
Because the various indicators in broad money do not exist alone, and the indicators interact with each other, it is necessary to combine multiple indicators to analyze the economic situation at that time.
Second, the significance of M2 currency increase:
M2 money usually refers to cash circulating outside the banking system plus corporate deposits, residents' savings deposits and other deposits, that is, money supply in a broad sense. When M2 money increases, it represents the increase of money supply in society, which will cause inflation to some extent.
The increase of M2 currency has caused a general rise in social prices, reduced the purchasing power or potential purchasing power of residents, and made the currency even less valuable. At the same time, some residents often put M2 and M 1 together for analysis. When M2 is too high and M 1 is too low, it means that the investment is overheated, the demand is not strong, and there is a crisis risk.
Currency type:
First, m0:
What is circulating now refers to the total cash held by the whole society (residents and units) outside the banking system? ; This indicator is seasonal. For example, the number of m0 plants will increase rapidly on holidays. In real life, it is not enough to count only m0, because demand deposits can be easily converted into cash, so adding demand deposits to cash forms a new concept M1;
Two. M 1 (narrow money):
Cash in circulation (m0)+ demand deposit; This indicator can be extracted at will, which reflects the abundance and purchasing power of funds in hand of residents and enterprises. But this indicator can't count all the wealth in society, so on the basis of m 1, plus the time deposits of commercial banks, the indicator m2 is formed.
Three. M2 (broad money):
Cash in circulation+demand deposit+time deposit; ? This index can reflect the potential purchasing power of the whole society;