ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The money supply is the sum total of all of the currency and other liquid assets in a country’s economy on the date measured. The money supply includes all cash in circulation and all bank deposits that the account holder can easily convert to cash.

Detailed explanation-2: -Definition: The total stock of money circulating in an economy is the money supply. The circulating money involves the currency, printed notes, money in the deposit accounts and in the form of other liquid assets.

Detailed explanation-3: -Solution. a) If all money is held as currency, then the money supply is equal to the monetary base.

Detailed explanation-4: -The total stock of money in circulation among the public at a particular point of time is called money supply. It needs to be noted that total stock of money is different from total supply of money. Supply of money is only that part of total stock of money which is held by the public at a particular point of time.

Detailed explanation-5: -Currency in circulation represents those banknotes and coins that have been produced and issued for use in the economy. Notes and coins held in the central bank’s vault, including notes and coins returned to the central bank by banks, are not considered part of currency in circulation.