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  Retail deposits are the deposits of the private sector which can be withdrawn easily.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Any bank deposit which can be withdrawn without incurring (a loss of) interest penalty is referred to as a "sight deposit".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

Costs of Economic Growth (Increase in National Income) 1.     People living in industrial towns suffer from the effects of a polluted atmosphere. 2.     The manufacture of

find out the characterstics of national stock exchange

Concept of Managerial Economics The discipline of managerial economics deals with characteristics of economics and tools of analysis that are used by business enterprises for dec

THE ACCELERATION PRINCIPLE Suppose that there is a given ratio between the level of output Y t at any time t , and the capital stock required to produce it K t and that

a) The following would most likely shift a production possibilities curve to the right? b) Money should not be considered an economic resource ? c)  Which of the following is

Demand for money   The demand for money is a more difficult concept than the demand for goods and services.  It refers to the desire to hold one's assets as money rather tha

what are the instruments variable of marrise''s model?

Open Market Operations The Central Bank holds government securities.  It can sell some of these, or buy more, on the open market, buying or selling through a stock exchange or

What is Cyert and March's behavior theory? What are the demerits.