M0, M 1, M2 and M3 are indicators used to reflect the money supply. M 1 reflects the actual purchasing power in the economy, and M2 reflects the actual and potential purchasing power.

If the growth rate of M 1 is fast, the consumption and terminal market will be active; If M2 grows faster, the investment and intermediary market will be active.

If M 1 is too high and M2 is too low, it indicates that there is strong demand, insufficient investment and inflation risk. M2 is too high, while M 1 is too low, indicating that investment is overheated, demand is not strong, and there is a risk of asset bubble.

Usually, M2 mainly measures the trading activities of investment market and capital market in economic system.

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