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  1. Study with Quizlet and memorize flashcards containing terms like define money supply, what does the money supply look like?, how does the fed control the money supply? and more.

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    • M4
    • Functions of Money
    • Money Supply and Inflation
    • How to Increase The Money Supply

    M4 is a wider definition of the money supply. This broader definition includes 1. Notes and coins in circulation 2. Private sector deposits in banks and building societies. 3. Checkable deposits, such as travellers checks. 4. Mutual funds and money market securities – despoits which can be converted to cash within a fairly short time. 5. Short-term...

    Money must have at least two of these functions 1. Medium of exchange 2. Store of value 3. Deferred payment 4. Unit of account Due to changes in the financial system the money supply has been difficult to measure accurately, this makes it difficult to implement Monetarism, which states there is a relationship between the money supply and inflation.

    Monetarists believe there is a strong link between the money supply and inflation. If the money supply increases faster than real output, then prices will increase causing inflation. This is known as the quantity theory of money (MV=PT) However, other economists believe this link between the money supply and inflation is more complicated. See: Link...

    Print more money
    Quantitative easing – the electronic creation of money by Central Banks.
    Increased bank lending – banks lending higher % of their deposits.
    Central Bank purchases bonds from private individuals which can be spent.
    • 11 min
  4. M2 money supply is now measured as M1 plus time deposits, certificates of deposits, and money market funds. M1 money supply includes coins and currency in circulation —the coins and bills that circulate in an economy that the U.S. Treasury does not hold at the Federal Reserve Bank, or in bank vaults.

  5. Sep 19, 2024 · The money supply is the total amount of cash and cash equivalents, such as savings account balances, circulating in an economy at a given point in time. Variations in the money supply take...

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  7. Learn economics money supply with free interactive flashcards. Choose from 500 different sets of economics money supply flashcards on Quizlet.

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