monetary supply

Monetary supply refers to the total amount of money available in an economy at a specific time. This includes cash, coins, and deposits that can be easily converted into cash. Central banks, like the Federal Reserve in the U.S., control monetary supply through policies that influence interest rates and bank lending. A higher money supply can stimulate economic growth, while a lower supply can help control inflation and stabilize prices. Understanding monetary supply is crucial because it affects daily life, from interest rates on loans to the prices of goods and services.