Broad Money

Posted in Finance, Accounting and Economics Terms, Total Reads: 802

Definition: Broad Money

Broad money concept in economics is the most elaborative definition of the money supply. Broad money is supply consists of the notes as well as coins. 

Cash can be exchanged for many financial instruments so it becomes very difficult to estimate how much money is currently available in the market. There are many methods available to estimate money supply but broad money is the broadest of all the definitions.

Broad money can also have generic perceptions across the world, i.e. the term can be very differently used in America as compared to Australia. In America, the concepts of supply if money is explained by terms like M0: Reserve money, M1: Narrow Money, M2, M3 (Broad Money), M4 etc. Out of these, M3 represents broad money.

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