Barter System: Goods exchanged for goods It proved to be inefficient with the passage of time Money came in as a medium

um of exchange Money also as a store of value and Measure of value

According to Crowther, Money can be defined as anything that is generally accepted as a means of exchange and at the same time acts as a measure and as a store of value.

Stock Money supply at a point of time Stock of money held by the public on a particular date. It is total of currency notes, coins, demand deposits with banks that is held by the public Does not include money held by central banks, commercial banks

Flow Over a period of time, money supply becomes a flow concept. A unit of money is spendable and respendable Flow of money is measured by : Stock of money x velocity of circulation of money

Money Supply is the stock of money held by the people in spendable form

Money Supply is the amount of money which is in circulation in an economy at any given time It is the total stock of money held by the people consisting of individual firms, State and its constituent bodies except Central Bank, Commercial Banks & State treasury because these are money creating agencies

Currency Money
Coins Currency Notes

Secondary Money
Demand Deposits Transferable by cheques for settlement of debt Also known as Bank Money

Monetary Base Communitys Choice Extent of Monetization

Cash Reserve Ratio

Monetary Policy of the Central Bank Fiscal Policy of the Government Velocity of Circulation of Money

 Velocity of Circulation of Money determines the flow

of money supply in an economy in a given period of time. It is the average number of times a unit of money changes hands Money Supply in a given period = M*V where M= Amount of money in circulation, V= Velocity of circulation of money in a given period

M0 = Currency in Circulation + Bankers Deposits with the RBI + Other Deposits with the RBI

M1 = Currency with the public + Demand Deposits with the banking system + other deposits with the RBI M2 = M1 + Time Liabilities Portion of Savings Deposits with the Banking System + Certificates of Deposit issued by Banks + Term Deposits with a contractual maturity of up to and including one year with the Banking System M3 = M2 + Term Deposits with a contractual maturity of over one year with the Banking System + Call/Term borrowings from 'Non-depository Financial Corporations by the Banking System