MONEY SUPPLY
- Money Supply refers to stock or volume of money held by public at a particular point of time in an economy (and is therefore a stock concept)
- Money Supply will include only those money held by public i.e., individuals and business firms
- Stocks of money held by the government and the banking system of a country will never be treated as a part of the supply of money in the country (as they are the suppliers of money)
- Measures of Money Supply : M1, M2, M3 and M4 (and M3 is widely used as the Aggregate Monetary Resources of the country)
- Bank Money refers to demand deposits of the people with the commercial banks
- High powered money refers to monetary base or base money in the country ( includes currency and coins held by public, vault cash of commercial banks and cash reserves of commercial banks with the RBI)
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