money supply
The quantity of money present in an economy at a given moment. Monetarists hold that a rapid increase in money supply inevitably provokes an increase in the rate of inflation.
The money-supply classification M-1 consists of currency and demand deposits. Since the Federal Reserve holds some currency, only circulating currency is included in M-1. Bank deposits, payable on demand, constitute as much as three-fourths of the money supply.
Some economists consider near-money, such as time deposits or liquid assets, as part of M-1. The government can expand or restrict M-1 through monetary policy.
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