Broad Money refers to M3.

M3 is a measure of money supply that includes all the components of M1 and M2 along with other forms of deposits. It is the broadest measure of money supply and provides a comprehensive view of the money circulating in an economy.

Here is a detailed explanation of the components of M3 and why it is considered as Broad Money:

1. M1 (Narrow Money):
- M1 is the narrowest measure of money supply.
- It includes currency in circulation (physical cash) and demand deposits (checking accounts) held by individuals and businesses.
- M1 represents the most liquid forms of money that can be readily used for transactions.

2. M2:
- M2 includes all the components of M1 and adds certain types of deposits that are less liquid than M1.
- It includes savings deposits, time deposits (certificates of deposit), and money market mutual funds held by individuals and businesses.
- M2 represents a broader definition of money supply as it includes both highly liquid and less liquid forms of money.

3. M3 (Broad Money):
- M3 includes all the components of M2 and further adds certain types of deposits that are even less liquid than M2.
- It includes longer-term time deposits, repurchase agreements, and money market funds held by institutional investors.
- M3 represents the broadest measure of money supply as it includes all the forms of money circulating in the economy, both liquid and less liquid.

Why M3 is considered Broad Money:
- M3 is the broadest measure of money supply as it includes all the components of M2 along with other forms of deposits.
- It provides a more comprehensive view of the money circulating in an economy, capturing a wider range of financial assets that can be used as a medium of exchange.
- By including less liquid forms of money, M3 takes into account the broader financial assets held by individuals, businesses, and institutional investors, providing a more accurate picture of the money available for spending and investment purposes.

In conclusion, Broad Money refers to M3, which is the broadest measure of money supply. It includes all the components of M2 along with additional forms of deposits, capturing a comprehensive view of the money circulating in an economy.