money supply
(noun)
The total amount of money available in an economy at a specific time.
Examples of money supply in the following topics:
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Measuring the Money Supply
- In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time.
- In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time.
- Money supply data are recorded and published, usually by the government or the central bank of the country.
- In economics, the monetary base (also base money, money base, high-powered money, reserve money, or, in the UK, narrow money) is a term relating to (but not being equivalent to) the money supply (or money stock) or the amount of money in the economy.
- In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time.
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Control of the Money Supply
- A nation's money supply is determined by the monetary policy actions of its central bank.
- A nation's money supply is determined by the monetary policy actions of its central bank.
- In determining a nation's money supply, its central bank first sets the supply of the monetary base and upholds certain restrictions on the value of assets and liabilities held by smaller commercial banks.
- The value of the money supply is determined by themoney multiplier and the monetary base.
- Summarize the argument against the role of open market operations in determining the nation's money supply
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Growth Through Monetary Policy
- Through monetary policy, the government exerts its power to regulate the money supply and level of interest rates.
- To counter a recession, the Fed uses expansionary policy to increase the money supply and reduce interest rates.
- Monetary policy rests on the relationship between the rates of interest in an economy (the price at which money can be borrowed) and the total money supply.
- All have the effect of contracting the money supply and, if reversed, expand the money supply.
- An expansionary policy increases the size of the money supply more rapidly or decreases the interest rate.
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Introduction to the Federal Reserve
- When the general price level is rising too fast, the Federal Reserve acts to slow economic expansion by reducing the money supply, thus raising short-term interest rates.
- When the economy is slowing down too fast or contracting, the Federal Reserve increases the money supply, thus lowering short-term interest rates.
- Monthly changes in the currency component of the U.S. money supply as reported by the Federal Reserve
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Open Market Operations
- They can achieve this through expansionary monetary policy, buying government bonds and increasing the money supply.
- The usual aim of open market operations is to control the short term interest rate and the supply of base money in an economy, and thus indirectly control the total money supply.
- This involves meeting the demand of base money at the target interest rate by buying and selling government securities, or other financial instruments.
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Types of Currency
- These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply.
- The other part of a nation's money supply consists of bank deposits (sometimes called deposit money), ownership of which can be transferred by means of checks, debit cards, or other forms of money transfer.
- However, nearly all contemporary money systems are based on fiat money.
- Commercial bank money differs from commodity and fiat money in two ways.
- Fiat, Commodity, and Commercial Bank money are three main types of money
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Special topic: supply chain management
- Supply chain management is the business function that coordinates and manages all the activities of the supply chain, including suppliers of raw materials, components and services, transportation providers, internal departments, and information systems.
- Exhibit 31 illustrates a supply chain for providing packaged milk to consumers.
- In the manufacturing sector, supply chain management addresses the movement of goods through the supply chain from the supplier to the manufacturer, to wholesalers or warehouse distribution centers, to retailers and finally to the consumer.
- The supply chain is not just a one way process that runs from raw materials to the end customer.
- Money also tends to flow "upstream" in the supply chain so goods and service providers can be paid.
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Exchange Rates
- They can only buy foreign cash from a local money changer.
- A currency will tend to become more valuable whenever demand for it is greater than the available supply.
- Conversely, it will become less valuable whenever demand is less than available supply.
- Increased demand for a currency can be due to either an increased transaction demand for money or an increased speculative demand for money.
- Central banks typically have little difficulty adjusting the available money supply to accommodate changes in the demand for money due to business transactions.
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The political/legal environment
- Most firms probably prefer to engage in the export business rather than invest considerable sums of money in investments in foreign subsidiaries.
- Governments set some exchange rates independently of the forces of supply and demand.
- The forces of supply and demand set others.
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Countertrade
- Countertrade is a system of exchange in which goods and services are used as payment rather than money.
- The switch trader gets the sugar from Party B at a discount and sells it for money.
- The money is used as Party A's payment to Party B.
- Barter: Exchange of goods or services directly for other goods or services without the use of money as means of purchase or payment.
- Buyback: This occurs when a firm builds a plant in a country, or supplies technology, equipment, training, or other services to the country, and agrees to take a certain percentage of the plant's output as partial payment for the contract.