In this video, learn about the two measures of money that are part of the money supply – M1 and M2 – as well as the monetary base (which is sometimes called M0).

Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/macroeconomics/monetary-system-topic/factional-reserve-accounting/v/simple-fractional-reserve-accounting-part-1?utm_source=YT&utm_medium=Desc&utm_campaign=macroeconomics

Missed the previous lesson? https://www.khanacademy.org/economics-finance-domain/macroeconomics/monetary-system-topic/fractional-reserve-banking-tut/v/full-reserve-banking?utm_source=YT&utm_medium=Desc&utm_campaign=macroeconomics

Macroeconomics on Khan Academy: Topics covered in a traditional college level introductory macroeconomics course

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Subscribe to Khan Academy’s Macroeconomics channel: https://www.youtube.com/channel/UCBytY7pnP0GAHB3C8vDeXvg
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There’s just so much confusion surrounding the money supply that it isn’t even funny. What’s the monetary base? What are M1 and M2? What’s the difference between the money supply and the monetary base?

… the list could go on and on.

Today, I’ve taken things one step at a time by initially defining and explaining the money supply. I’ve then moved on to the definition and explanation of the monetary base, of M1 as well as M2.

Finally, I did my best to help people figure out how to interpret central banking decisions and outcomes through a proper understanding of the monetary supply. For example, the effects of QE on the monetary base compared to its effects on M1 and, finally, its effects on M2.

If you’d like to follow me on social media, use one of the links below:

https://www.facebook.com/oneminuteeconomics

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