Money Supply can be defined as the money circulating in an economy. M2 as a measurement of the money supply is a critical factor in the forecasting of issues like inflation. In those cultures, the shells thus used would have formed part of the money supply. Money Supply M2 in the United States averaged 4380.52 USD Billion from 1959 until 2020, reaching an all time high of 18811.60 USD Billion in October of 2020 and a record low of 286.60 USD Billion in January of 1959. For example, in many cultures in the past, shells have been used as money. What is the Money Supply? M3 money supply in the United States as a proportion of gross domestic product. The Money Supply . Some economists consider time and savings deposits to be part of the money supply because such deposits can be managed by governmental action and are involved in aggregate economic activity. The money supply includes coin, currency, and demand deposits. Money Supply is measured and expressed using different monetary aggregates like M1, M2, M3, M4 etc. The demand and supply curve for money can be represented as follows: Supply of Money. Money Supply M2 in the United States increased to 18811.60 USD Billion in October from 18658.10 USD Billion in September of 2020. Money Supply M0 in the United States averaged 859105.03 USD Million from 1959 until 2020, reaching an all time high of 5149527 USD Million in May of 2020 and a record low of 48362 USD Million in March of 1961. It includes actual notes and coins and also any deposits which can be quickly converted into cash. There is a strong relationship between the growth of money supply and long-term price inflation. As money supply is connected with ‘circulating money’, only the highly-liquid forms of money like currency and bank deposits are usually considered. On June 30, 2004, the money supply, measured as the sum of currency and checking account deposits, totaled $1,333 billion. Money supply is defined as the total quantity of money circulating in the economy at a particular time. The money supply measures the total amount of money in the economy at a particular time. The money supply is the stock of money in the economy. Money supply, the liquid assets held by individuals and banks. Many countries use it as an indicator of economic performance. M3 is a collection of the money supply that includes M2 money as well as large time deposits, institutional money market funds, short-term repurchase agreements, and larger liquid funds. It is determined by the uses to which certain physical and financial assets are put. M0 = This is the level of notes and coins in circulation + banks operational balances at the Bank of England. Money Supply M0 in the United States increased to 4917100 USD Million in October from 4880400 USD Million in September of 2020. Money supply has a direct effect on inflation, the business cycle, and the price level of goods and services. The supply of money in an economy is controlled by its central bank, for example, Fed in the US. The U.S. money supply comprises currency—dollar bills and coins issued by the Federal Reserve System and the U.S. Treasury—and various kinds of deposits held by the public at commercial banks and other depository institutions such as thrifts and credit unions. e.g. Demand and Supply Curve. The Fed may change the money supply by using open market operations or by changing reserve requirements. Narrow Money. There are three measures of money supply M1, M2, and M3.