Currency (Physical Money)

Bank Money (Bank Deposit Money)

An individual deposits $500 in physical cash into their checking account at a commercial bank. What is the immediate effect of this single transaction on the total measured money supply?

Analyzing the Composition of an Economy's Money Supply

Describing the Money Supply

In a modern economy, the total measured money supply is equivalent to the total value of all physical banknotes and coins currently in circulation.

Match each component of the modern money supply with its correct description.

An economy has the following financial assets:

• $200 billion in physical banknotes and coins held by the public.
• $800 billion in deposits in commercial bank checking accounts.
• $300 billion in government bonds.
• $50 billion in physical banknotes and coins held in bank vaults.
• $500 billion in corporate stocks.

Based on this information, what is the total measured money supply in this economy?

Comparing Components of the Money Supply

In addition to physical banknotes and coins in circulation, the other primary component of the measured money supply in a modern economy is known as ______, which consists of the total deposits held in commercial banks.

Arrange the following items to correctly represent how the total measured money supply is composed, starting from the most basic physical component.

Analyzing Economic Structures via Money Supply Composition