Explanation of M values.
M0 = Physical cash and coin
M1 = All of M0 plus demand deposits, traveler’s checks and ASSETS that can be quickly converted.
This is used as a measurement for economists trying to quantify the amount of money in circulation. The M1 is a very liquid measure of the money supply, as it contains cash and assets that can quickly be converted to currency.
Assets. 1. Current assets are important to businesses because they are the assets that are used to fund day-to-day operations and pay ongoing expenses. Depending on the nature of the business, current assets can range from barrels of crude oil, to baked goods, to foreign currency.
M2 = All of M1 plus savings deposits, money market shares
A category within the money supply that includes M1 in addition to all time-related deposits, savings deposits, and non-institutional money-market
funds.
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