Supply of money, Managerial Economics

The supply of money

Refers to the total amount of money in the economy.

Most countries of the world have two measures of the money stock - broad money supply and narrow money supply.  Narrow money supply consists of all the purchasing power that is immediately available for spending.  Two narrow measures are recognized by many countries.  The first, M (or monetary base), consists of notes and coins in circulation and the commercial banks' deposits of cash with the central banks.

The other measure is M2 which consists of notes and coins in circulation and the NIB (non-interest-bearing) bank deposits - particularly current accounts.  Also in the M2 definition are the other interest-bearing retail deposits of building societies.  Retail deposits are the deposits of the private sector which can be withdrawn easily.  Since all this money is readily available for spending it is sometimes referred to as the "transaction balance".

Any bank deposit which can be withdrawn without incurring (a loss of) interest penalty is referred to as a "sight deposit".

The broad measure of the money supply includes most of bank deposits (both sight and time), most building society deposits and some money-market deposits such as CDs (certificates of deposit).

Posted Date: 11/28/2012 6:58:55 AM | Location : United States







Related Discussions:- Supply of money, Assignment Help, Ask Question on Supply of money, Get Answer, Expert's Help, Supply of money Discussions

Write discussion on Supply of money
Your posts are moderated
Related Questions
Q. Explain about Inventory Economies? Inventory Economies: Role of inventories is to aid the firm in meeting random changes in the output and the input sides of the operations

Cross-elasticity is the measure of responsiveness of demand for a commodity to the changes in price of its substitutes and complementary goods. For example, cross-elasticity of dem

Real and nominal wages Wages are wanted only for what they will buy, real wages being wages in terms of the goods and services that can be bought with them.  Nominal wages


Determine the studies of Managerial economics Managerial economics studies the application of techniques, principles as well as concepts of economics to managerial problems of

SEARCH THEORIES  -  A BRIEF' HISTORICAL OVERVIEW   A search theory of unemployment is found even in the writings of A. C. Pigou in  the inter-war  period. To explain the  high

Q. What is Marketing Economies? They are allied with selling of the product of the firm. They arise from advertising economies. Because advertising expenses increase less than


Q. Explain about Frequency domain? Frequency domain:   Frequency domain is a term which is used to elucidate the domain for analysis of mathematical signals or functions with

Why we need to distinguish between private cost and social cost?