Money Supply

The money supply, or money stock, refers to the total amount of money held by the nonbank public at a point in time in an economy. Since most modern economic systems are regulated by governments through monetary policy, the supply of money is broken down into types of money based on how much of an effect monetary policy can have on that type of money.

Each type of money can be classified by placing it along a spectrum between narrow (easily affected) and broad (difficult to affect) money. Narrow money is the type of money that is more easily affected by monetary policy whereas broad money is more difficult to affect through monetary policy. Narrow money exists in smaller quantities while broad money exists in much larger quantities.