"M2 is a better definition of the money supply than M1." Agree or disagree with this statement. In your argument, clearly state the criteria on which you are basing your decision.

In conclusion, M2 is a better definition of the money supply than M1 because it encompasses a wider range of components relevant to economic functioning. While M1 focuses on the most liquid assets, M2 includes additional elements such as savings deposits, small time deposits, and non-institutional money market funds, providing a more complete representation of the economy's spending power. By choosing the criteria of consistency, relevant economic factors, and usefulness for policy decisions, it becomes clear that M2 is the superior definition. Although M1 offers ease of measurement, M2's broader scope grants policymakers more in-depth information that can better inform monetary policy decisions. However, it is important to note that the choice of a better definition depends on the chosen criteria, and other factors may lead to different conclusions. Additionally, considering both M1 and M2 can provide a more comprehensive understanding of the money supply and its implications on the economy.