Which of these measures of money supply is referred to as the aggregate monetary resources?

The correct answer is M3.Key Points

• M3 is the measure of money supply that includes all the components of M2 (currency, demand deposits, and time deposits) as well as large-time deposits, repurchase agreements, and institutional money market funds.
• M3 is often referred to as the aggregate monetary resource because it represents the broadest measure of money supply.
• M4 is another measure of money supply that includes all the components of M3 as well as holdings of money market instruments, such as commercial paper and treasury bills.
• MI, or monetary base, is the narrowest measure of money supply and includes only currency in circulation and reserves held by banks at the central bank.
• M2 is a broader measure of money supply than MI.

Additional Information

• M4 is not as commonly used as the other measures of money supply.
• MI is often used as a tool for monetary policy, as changes in the monetary base can affect the amount of lending and borrowing in the economy.
• M2 is often used as an indicator of economic activity, as the level of deposits in the economy can indicate the level of consumer and business spending.
• M3 is often used as an indicator of inflationary pressures, as an increase in the money supply can lead to an increase in prices.