The supply of money is the amount of money in circulation in a country. The supply of money depends on the following grounds:

  1. The monetary policy of the financial authority in which Central Bank increases or decreases the quantity of money. 
  2. Credit policy of the Commercial Banks in which the banks make more credits. 
  3. The public demand for Loans. This entails that the people’s demand for loan is high when sales and profits are high.
  4. The price of Income caring assets e.g. Bonds. When banks buy more bonds, it increases bank deposits.

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