first, the total amount of money
The total amount of money refers to the total amount of paper money put into circulation. It is a calculation standard for different levels of money supply. The total amount of money is the amount of money calculated according to different levels of money supply. Studying the money supply in different levels and calculating the total amount are conducive to analyzing the different effects of different levels of money supply on commodity circulation and economic activities, and to controlling the money supply by national monetary decision-making institutions in order to effectively regulate economic activities.
the total amount of money has two different concepts: stock and flow.
the so-called stock of money refers to the total amount of money actually existing in the whole economy at a certain point in time;
the so-called money flow refers to the total amount of money circulating in a country in a certain period, which is actually the product of money stock and money circulation speed.
the scope of the total amount of money:
the total amount of money is distributed in the hands of residents and in the vaults of credit systems, enterprises and units. The total amount of money is determined by the law of currency circulation, which reflects the scientifically reported relationship between residents' monetary income and the total amount of cash for selling goods and services, and the total amount of money is also determined by the speed of currency turnover.
Second, the division of monetary hierarchy
The division of monetary hierarchy in China is:
M= cash in circulation
Narrow money (M1)=M+ bank demand deposits
Broad money (M2)=M1+ time deposits+savings deposits+customer deposits of securities companies
Broad money and M3=M2+ finance.
where M2 minus M1 is quasi-currency, M3 is set according to the continuous innovation of financial instruments.
M1 reflects the actual purchasing power in the economy; M2 not only reflects the actual purchasing power, but also reflects the potential purchasing power. If M1 grows faster, the consumption and terminal market will be active; If the growth rate of M2 is faster, the investment and intermediate market will be active. The central bank and commercial banks can judge monetary policy accordingly. M2 is too high and M1 is too low, which indicates that the investment is overheated, the demand is not strong, and there is a crisis risk; M1 is too high and M2 is too low, which indicates that there is strong demand and insufficient investment, and there is a risk of price increase.