Question : ___________ refers to the total amount of money in circulation in an economy.
Option 1: Money supply
Option 2: Money demand
Option 3: Money multiplier
Option 4: Money creation
Correct Answer: Money supply
Solution : The correct answer is (a) Money supply.
Money supply refers to the total amount of money available in circulation within an economy at a given time. It includes both physical currency (such as coins and banknotes) and various types of bank deposits that are considered as money.
The money supply is an important concept in monetary economics as it influences the overall level of economic activity, inflation, and interest rates. Central banks typically have the authority to control and regulate the money supply through their monetary policy tools, such as open market operations, reserve requirements, and interest rate adjustments.
