2. At present, China also divides the money supply into three levels, which means:
①M0: Cash in circulation, that is, cash circulating outside the banking system;
②M 1: narrow money supply, that is, M0+ demand deposits of enterprises and institutions;
③M2: broad money supply, that is, M 1+ time deposits of enterprises and institutions+savings deposits of residents.
④ In these three levels, M0 is closely related to consumption changes and is the most active currency;
⑤M 1 reflects the elastic change of residents' and enterprises' funds, which is the leading indicator of economic cycle fluctuation, and the liquidity is second only to M0;
⑥M2 is weak in liquidity, but it reflects the change of total social demand and the pressure of inflation in the future. Money supply usually refers to M2.
Tips: The above contents are for reference only.
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