money supply

Money Supply

The entire quantity of bills, coins, loans, credit, and other liquid instruments in a country's economy.

Notes:

Money supply is divided into three categories--M1, M2, and M3--according to the type and size of account in which the instrument is kept. The money supply is important to economists trying to understand how policies will affect interest rates and growth.

See also: M1, M2, M3, Monetary Policy, Narrow Money, Velocity

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Money supply

M1-A: Currency plus demand deposits.

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money supply

The amount of money in the economy. Since the money supply is considered by many to be a critical element in determining economic activity, the financial markets attach great importance to Federal Reserve reports of changes in the supply. For example, consistently large increases in the money supply bring fears of future inflation. There are a variety of measures of the supply of money depending on how strictly it is defined. Also called money stock. See also M1, M2, M3, monetarism.