5 Questions
What does the money supply refer to in macroeconomics?
Total volume of money held by the public at a particular point in time
Who usually records and publishes money supply data?
National statistical agency or central bank
Which measures are usually included in standard measures of money supply?
Currency in circulation and demand deposits
How are empirical money supply measures usually named?
M1, M2, M3, etc.
What makes up the largest part of the money supply in modern economies?
Deposits in commercial banks
Study Notes
Money Supply in Macroeconomics
- The money supply refers to the total amount of monetary assets available in an economy for purchasing goods and services.
Recording and Publishing Money Supply Data
- Central banks, such as the Federal Reserve in the United States, usually record and publish money supply data.
Standard Measures of Money Supply
- Standard measures of money supply usually include:
- M0 (narrow money): physical cash, coins, and central bank reserves
- M1 (narrow money plus checking deposits): M0 plus checking deposits
- M2 (broad money): M1 plus savings deposits, money market funds, and other liquid assets
- M3 (broad money plus larger liquid assets): M2 plus large time deposits, institutional money market funds, and other liquid assets
Empirical Money Supply Measures
- Empirical money supply measures are usually named with an "M" followed by a number, such as M0, M1, M2, and M3.
Largest Part of the Money Supply
- The largest part of the money supply in modern economies is made up of commercial bank deposits, particularly checking and savings accounts.
Test your knowledge of macroeconomics with this quiz on money supply. Explore the different measures of money and understand its significance in the economy.
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