Is it okay to include both money supply 1 (M1) and money supply 2 (M2) in one regression model as independent variables? What about consumer price index and foreign exhchange rate?

Answer 1

M! and M2 are highly correlated so you will have collinearity. You may want to create a variable Which is the Part of M2 not in M1 ie. M2* = M2-M1.