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  Retail deposits are the deposits of the private sector which can be withdrawn easily.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Any bank deposit which can be withdrawn without incurring (a loss of) interest penalty is referred to as a "sight deposit".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. Proportion of Income Spent on a Commodity? Another characteristic that has an impact on the elasticity of demand for a commodity is proportion of income that consumers use u

Q. Show the Long Term Goals - Demand forecast? Long Term Goals:   If the demand forecast period is more than a year, in that scenario it's termed as long term forecast. Follow


excise tax and its impact on manufacturing industry with respect to demand and supply curves

Ajax has the following short run cost curve when tc=800000-5000Q+100Q2

the benefits of exchange in the light of the law of association, the introduction of money in direct exchange and way income gets distributed among market participants

Factor combination in the long run In the long run it is possible to vary all factors of production. The firm is therefore restricted in its activities by the law of diminish

Other Determinants 1.          Rate of Interest Is contained in the argument of the classified economists who argued that rational consumers will save more and consume les

NATIONAL INCOME AND WELFARE The relationship between National Income and Welfare is best explained in terms of economic growth (By economic growth is meant capacity expansio

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