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Economics vocabulary · Central Banks and Interest Rates

Money supply

Meaning in economics, with examples

nounCommon term

In economics, money supply means: The total amount of money circulating in an economy, including cash and bank deposits, measured with categories such as M1 and M2.

In Turkish: para arzı

How it is used

Central banks influence the money supply through interest rates, bank reserves and asset purchases. Monetarist economists link fast growth in the money supply to inflation. The money supply grows, expands or contracts.

Example sentences

  1. The M2 money supply grew by 30% last year, far faster than output.

  2. When the central bank buys bonds, it increases the money supply.

Common collocations

  • growth in the money supply
  • expand the money supply
  • broad money supply
  • M2 money supply
  • central bankThe national institution that issues a country's currency, sets the main interest rate and works to keep prices and the financial system stable.
  • quantitative easingA policy in which a central bank creates new money to buy large amounts of government bonds or other assets, aiming to lower long-term interest rates.
  • inflationA general and continuing rise in the prices of goods and services in an economy, which means each unit of money buys less over time.
  • monetary policyThe actions a central bank takes to influence interest rates, the money supply and credit in order to control inflation and support the economy.

More terms: Central Banks and Interest Rates

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