Money supply is considered as one of the important variable that affects the over all macro economy. It refers to the total amount of currency and other liquid instruments including cash, coins,and balances held in checking and savings account in a country's economy at a specific time. From economic point of view there are two separate view point to define money supply based on the fact which things to be includes in MS or not.
- Narrow Money/Narrow money supply that includes all physical money like coins and currency along with demand deposits and other liquid assets held by the central bank.
- Broad Money/Broad money supply that includes more than just physical money such as currency and coins (also known as narrow money). It generally includes demand deposits at commercial banks, and any monies held in easily accessible accounts
Money supply is the quantity of money.