Money Supply
- The Money Supply measures the amount of money in the economy
- Narrow Money (e.g. M0) M0 = the level of notes and coins in circulation + banks operational balances at the Bank of England.
- Broad Money (e.g. M4). M4 = notes and coins in circulation plus private sector deposits in banks and building societies.
Functions of Money
- Money must have at least 2 functions
- Medium of exchange
- Store of value
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.
Essays and Revision Notes on Inflation
Inflation Essays
