Question

What are different concept of money supply

Answer 1

Answer:

the main concept of money supply is banking

Answer 2

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The Concept of Money Supply

By money supply we mean the total stock of monetary media of exchange available to a society for use in connection with the economic activity of the country.

According to the standard concept of money supply, it is composed of the following two elements:

1. Currency with the public,

2. Demand deposits with the public.

Before explaining these two components of money supply two things must be noted with regard to the money supply in the economy.

First, the money supply refers ‘to the total sum of money available to the public in the economy at a point of time. That is, money supply is a stock concept in sharp contrast to the national income which is a flow representing the value of goods and services produced per unit of time, usually taken as a year.

Secondly, money supply always refers to the amount of money held by the public. In the term public are included households, firms and institu­tions other than banks and the government. The rationale behind considering money supply as held by the public is to separate the producers of money from those who use money to fulfill their various types of demand for money.

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