Definition of Money supply:
Governments issue paper currency and coin through some combination of their central banks and treasuries. Bank regulators influence money supply available to the public through the requirements placed on banks to hold reserves, how to extend credit and other regulation..
Populations spending power represented by the quantity of liquid assets (usually cash) in an economy that can be exchanged for goods and services. Increase in money supply (relative to the output of goods and services) leads to inflation, higher employment, and high utilization of the manufacturing capacity. Its decrease leads to deflation, unemployment, and idle manufacturing capacity. It can have different meanings depending on the degree of liquidity chosen to define an asset as money. Measures of money supply (called monetary aggregates) have different criteria in different countries, and are categorized from the narrowest to the broadest. They include M0: sum of currency in circulation (notes and coins) plus banks reserves with the central bank. M1: currency in circulation plus current (checking) accounts plus deposit accounts transferable by checks. M2: currency in circulation plus savings accounts and non-interest bearing bank deposits. M3: M1 plus all private-sector (non-government) deposits and certificates of deposit; M3C: M3 plus foreign-exchange deposits with banks. M4: M1 plus private-sector bank deposits and money market investments. M5: M4 plus building-society deposits. Also called money stock.
The money supply is all the currency and other liquid instruments in a country's economy on the date measured. The money supply roughly includes both cash and deposits that can be used almost as easily as cash.
The total amount of money in circulation or in existence in a country.
How to use Money supply in a sentence?
- You need to always have a good money supply on hand so that you can take advantage of a good deal if one comes.
- The money supply was indicative of the nature of the relationship between the federal reserve and the economy as mentioned in todays meeting.
- By buying euros the central banks are taking them out of circulation and squeezing the money supply.
- You must always have a big enough money supply to be able to take advantage of a really good deal if it comes about.
Meaning of Money supply & Money supply Definition