What Is Supply Of Money, Ordinary Money And High Power Money

Supply of money

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The term supply of money refers to the stock of money held by public in spend able form only. It is aggregated stock of domestic money owned by the public in a country. Here the term public refers all categories of holders of money other than the central government or treasury, central bank and commercial banks. So, public means the individuals, business firms, industrial undertakings, state and local government bodies etc. Supply or money refers the total money available to the public.

Ordinary money and High power money

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Ordinary money is the sum of currency and demand deposits of banks held by the public. It composed by the local currencies hold by the public of any country.
High power money is the money produce by the central bank or the government and held by the public and bank. It is the sum of currency held by the public and cash reserve of bank. It is called as “Reserve Money”