The money supply is simply known as the currency and some liquid tools in the economy of a country on the date measured. The category of the money supply that one would be contributing to if you invest in money market funds is M2.
- Money supply incorporate both cash and deposits that can be used as cash. In the United States, the money supply is grouped based on monetary aggregates.
The groups are: M0, M1, and M2. The M2 also hase in it M1 and some short-term time deposits in banks and some money market funds.
It is use as a gauge or an indicator for inflation. M1 and M2 are regarded as narrow money.
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