How do you calculate broad money and narrow money?

Answer 1

Broad money and narrow money are two measures of the money supply in an economy. Narrow money, often represented by M1, includes the most liquid forms of money, such as cash and demand deposits. Broad money, represented by M2 or M3, includes narrow money plus savings accounts, time deposits, and other near-money assets that can be quickly converted into cash. To calculate these measures, one sums the relevant components: for M1, add currency in circulation and checking accounts; for M2, include M1 plus savings accounts and other liquid assets.