M1, M2 Money Supply

M1 and M2 are measures of the money supply that help gauge an economy's liquidity. M1 includes the most liquid assets—cash, checking accounts, and easily accessible funds used for daily transactions. M2 expands on M1 by adding near-money assets like savings accounts, small time deposits, and money market funds, which are less liquid but still relatively easy to access. Together, these measures help understand how much money is available for immediate spending (M1) versus what is available with some delay or effort (M2), providing insight into economic activity and monetary policy.