M2 is a measure of the money supply in an economy, which includes cash, checking deposits, and easily convertible near money. It is a broader classification than M1, which only accounts for cash and checking accounts. M2 is used by economists to gauge the amount of money available for spending and investment, influencing economic activity and inflation. Central banks, like the Federal Reserve, monitor M2 to help guide monetary policy. Changes in M2 can indicate shifts in consumer behavior and economic growth. A rising M2 may suggest increased spending, while a declining M2 could signal a slowdown in economic activity.