money supply

what is money supply?

As long as these four functions are satisfied, everyone’s money can be anything. It should be accepted as a medium of exchange. It’s really important that the other option we have is a later exchange and a leading exchange. For example, if I need a pencil, if someone sells me a pencil, I hope the person selling the pencil will accept my board pen.

money supply

Board pens do not accept that a transaction cannot be made if you have money. Then the medium of exchange is really important because the transaction that is accepted by both parties can happen with money instead and it allows the economy to operate primarily on money. You just have to be more discriminating with the help you render toward other people. For example, if you use commodities such as fruits, you know they are bad, they will lose their value over time, so a value warehouse must satisfy that function.

One hundred pounds may not have the same value in ten years, so inflation can erode the idea of ​​a sora value, but the basic idea is that if you have a hundred pounds in your bank account, a hundred pounds will still be there, and inflation could reduce its true value in 10 years. But you can still store money to act as an important cash account or to measure value, then if you have two items you know that the good one that costs twenty-five pounds with a good one at ten pounds will change in some way.

You know, if there are different prices, these items are important in some way, and the money has been received to act as a third payment standard, and what’s really important is that those who do not have money can now get a loan, which means that they can repay the money over time. It is a very useful function so that those who do not have money can still buy goods and services with a small refund today. Therefore, the idea of ​​bringing in a third payment standard is very important for lenders and borrowers alike in relation to the financial markets. What are the characteristics that money should have when it comes to activating money, that is, acting as a medium of exchange can really be carried in the hand.

Of course having money does not make sense it can be easily carried, it should be durable and it can be split. It is really easy to keep and easy to understand. It can be broken down into different units. For example in the context of the UK the pen and pound will be limited in supply, so its value is important and it is Counterfeiting must be difficult to set up, otherwise people will lose faith in money. The notes on the coins we use today have no value. So, if notes and coins run out due to high inflation, you cannot go and trade your notes and coins for anything else. Money for you If you go back 80 years, trade money has always had some innate value and in many countries there was what is known as the gold standard, so you can get your money and cash and cash with the help of gold. You know the value of your money and coins you can now go to the central bank and trade for a certain amount of gold. Completely lost we use Fiat banknotes and coins.

We have high inflation about the value of those notes and coins. The money we have is simply useless. We have to restart with any new money the government decides to print. It’s important to know that we are moving to different types of money. Coins can vary from liquidity and liquidity is the convenience of converting money well into cash If money is a very high liquid it can be right because yes money can be what we know as money and money but money also comes in different types Meanwhile, the money supply will be received in a second note, and the coins will actually be deposited in the correct deposits in the banks where the individuals are.

For example, deposits are also a very important currency as they can easily convert a very large amount of liquidity held by the Bank of England into cash, and if you have something close to the liquid, these are non-cash assets but can be easily converted into cash, for example you deposit your money in a bank A deposit guarantee that you make but for a fixed period of time it goes to an interest rate for a period of five years so it can take up to five years but if you do not pay a significant fee for it, your money cannot be withdrawn from that bank account within those five years.

In that sense, your money is not as liquid as ordinary deposits and coins, you can take it out whenever you want, but it’s still a very high liquidity and you know it will become the cash you can get in as little as five years. So it is a non-cash asset but it is still somewhat liquid. For example, you know that these bonds mature in a short period of time with maturities of three or five years, but you can buy and sell them. Then you can easily avoid them as cash. You can easily convert liquid into cash if you want. That’s what we mean by approximate money. We look at different types of money supply. The money supply is the largest supply and only the total amount of money circulating in the economy.

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