Economics 201 Data Exercise

922 WordsMar 30, 20134 Pages
COMPONENTS OF MONEY SUPPLY CORINE E. PABON ECON201 March 5, 2013 What is the meaning of money supply? To half of the human population money supply is government assistance i.e. unemployment checks, disability checks, food stamps, etc. Some people feel it is utilize to pay for wars and mass destructions. To others it’s just translated into their household and how the next bill is going to be paid. On a contrary, although these circumstances play a role, the meaning of money supply is a little more complex. Money supply basically means “money stocked” it is the total amount of monetary assets available in an economy at a specific time. There are several ways to define "money," but standard measures usually include currency in…show more content…
Remember, a bank’s assets must always equal its liabilities. This is most likely the reason why the first steps into applying for a loan are credit checks. A bank has a lot at stake; if the bank hands out a loan to someone who does not have good credit history it’s a big possibility they would lose out on a lot of valuables. In conclusion with the information provided one can make an analysis that the amount of money in a nation’s money supply is crucial to the health of its economy. If there is not enough money in circulation, the economy cannot grow. However, too much money in circulation can also cause serious problems. If we all have too much money, and loans are too easy to obtain, the money itself loses value and inflation results. References (2013). The Components of the Money Supply . [ONLINE] Available at: http://www.transtutors.com/homework-help/macro-economics/money-banking/money-supply-components/. [Last Accessed 06 March 13]. John Williams (e.g. 2011). Analysis Behind and Beyond Government Economic Reporting. [ONLINE] Available at: http://www.shadowstats.com/charts/monetary-base-money-supply. [Last Accessed 04 March 13]. Bob Demarco (2010). M2, Money Supply a Sobering View (Graph) -- A Look Beyond the Obvious . [ONLINE] Available at: http://allamericaninvestor.blogspot.com/2010/06/m2-money-supply-sobering-view-graph.html. [Last Accessed 07 March 13]. Mike Hewitt (2009). Monetary Policy and the U.S. Dollar.
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