M3 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 and M2, encompassing all liquid assets that can be quickly converted into cash. Central banks, like the Federal Reserve, use M3 to gauge the overall money supply and its potential impact on inflation and economic growth. M3 is important for understanding monetary policy and economic health. Changes in M3 can indicate shifts in consumer behavior and investment trends. Economists and policymakers analyze M3 data to make informed decisions regarding interest rates and other financial regulations.