monetary aggregate

Monetary aggregates are classifications of money in an economy, helping to measure the total amount of money supply available. They typically include different forms of money, such as cash, checking accounts, and savings. The most common aggregates are M1, which includes physical currency and demand deposits, and M2, which adds savings accounts and other near-money assets. Policymakers and economists use these aggregates to analyze economic health, manage inflation, and make decisions related to interest rates and financial stability. By understanding these categories, we can better grasp how money flows in an economy.