WHAT DO WE MEAN BY MONEY SUPPLY[ few definitions]
* In economics, the money supply or money stock, is the total amount of money available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in circulation and demand deposits (depositors' easily accessed assets on the books of financial institutions). Money supply data are recorded and published, usually by the government or the central bank of the country. Public and private sector analysts have long monitored changes in money supply because of its possible effects on the price level, inflation and the business cycle. * Money supply :The entire stock of currency and other liquid instruments in a country's economy as of a particular time. The money supply can include cash, coins and balances held in checking and savings accounts.
MEASURES OF MONEY SUPPLY IN INDIA
[ NOT VERY IMPORTANT FOR TOMORROWS PRESENTATION]
The four measures of money supply for annual compilation developed in India by the SWG (1977) are as follows: * M1 = currency with public + demand deposits with the banking system + other deposits with RBI * M2 = M1 + saving deposits with post office savings banks * M3 = M1 + time deposits with the banking system
* M4 = M1 + all deposits with post office savings banks excluding National Saving Certificates
Like every country, India has its own central bank – RBI, which performs the following roles: 1. Conduct monetary policy
2. Monitor and regulate banks and financial institutions
3. Act as government’s bank
1. Conducting monetary policy means that the central bank is in charge of making sure the country has the right amount of money by taking decision on how much money gets printed and how much get circulated into the economy.
Goals of RBI
The following quote comes from the RBI website and explains its goals: "...to regulate the issue of Bank Notes and keeping of reserves...
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