Use for questions primarily related to the stock of money, either narrow money (MB or M0), and broad money (M1, M2, etc). This can also be used in questions related to the creation of money by governments and central banks, including questions related to models with a money market like IS-LM, where the supply is of importance.
Questions tagged [money-supply]
341 questions
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Restricting "money creation" to the central bank
Iceland is considering removing "money creation" from commercial banks.
[Despite the date of the article, I don't think this is a joke, as it has been picked up in other places since without anyone claiming it was a joke.]
I guess that what they…
GS - Apologise to Monica
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7
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1 answer
Implications of declining money velocity
In the United States, the velocity of both the M1 and M2 money supplies has been declining for over a decade.
The decline in the velocity of M1 could be explained by the shift away from cash to cards and online payments.
What are the causes and…
Comptonburger
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5
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1 answer
Intuition behind Real Money Demand and Real Money Supply
Standard undergraduate textbooks begin with an exposition of the money market with the following equilibrium condititon:
$$\frac{M^{s}}{P}=L\left(R,Y\right)
$$
In the above, the LHS is what is defined as "Real Money Supply", and the RHS is defined…
ChinG
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How does the economy "detect" if money is removed from circulation?
It is well known that there is a strong connection between introducing more money into an economy and inflation, as well as removing money and deflation.
However, how does the economy as a whole "detect" if money is removed from it?
A similar…
vsz
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3 answers
Is a shrinking money supply environment painful for an economy?
During the great depression the money supply in the US fell by about a third. It is my suspicion that any economy with a falling money supply will generally be doing badly but of course I could be wrong. So I was wondering if the were any examples…
Mick
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3
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3 answers
Why are there (still) coins?
I find coins extremely inconvenient to carry and count. I feel I'm not the only one to find them annoying and inconvenient.
What are some economic reasons why all cash money isn't paper and coins still exist?
amphibient
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How would the economy work in a world with strict money supply and where none shall be created?
My intuition tells me this would absolutely limit growth. Trade and all types of borrowing including personal loans, mortgages, and interest rates on credit cards would be seriously limited.
From the standard monetary equation, the only way to raise…
Kermit
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3 answers
Where is the money that was in the economy pre-lockdown?
Countries are in lockdown, companies have no customers and thus no income.
They have to lay off staff which in turn means ex-staff have no income. Everyone simultaneously and quickly depletes any savings so they can no longer buy goods and…
Orchid
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2
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Change in money supply
Suppose a bank makes a loan of $1M to someone taking out a mortgage to buy a house by crediting that person's bank account with a deposit equal to the size of the mortgage. Suppose the required reserve ratio is 10%.
a)How much has the money supply…
user585380
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2 answers
What will happen if the government not print money?
I already post this question in Money.SE, but I need to transfer the question in to this site because it's off-topic...
As I said in my previews post.
I start researching the reason why the government can't print more money to resolve its dept and I…
Onel Sarmiento
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2
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What was the reason behind destroying or re-minting counterfeit gold coins of the same karats as the real ones?
I remember reading about an interesting event which happened in the early 19th century, in the Habsburg Empire.
A criminal organization, mainly composed of workers and corrupt administrators at a gold mine, minted prefect-quality gold coins…
vsz
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vote
0 answers
How do write downs impact the money supply?
This is a bit of a mix of micro and macroeconomics, but someone asked me how write-downs would impact the money supply this week. I didn't have a good answer.
Usually, this isn't that big of a deal. But with the commercial real estate market…
turbonate
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Bank loans are often offered as a mechanism of money creation--but how is money created long term?
I've been reading on money creation. Bank loans are often cited as a mechanism of money creation: working based on fractional reserves, banks issue loans to the public based on deposits, thereby "creating" money.
However, those loans must be paid…
eriophora
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Does constant money supply hinder economy?
Consider an hypothetical isolated economy (an island) where:
the only form of money is Coins
the amount of Coins is constant
the Coins are never lost or destroyed
In that scenario:
can the economy grow smoothly (e.g. produce more goods, produce…
elemolotiv
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Does money neutrality mean that nominal GDP (output) changes following changes in money supply?
If money neutrality stipulates that only nominal variables will be affected following changes in money supply, then does this mean that following such money supply changes, real GDP remains unchanged while nGDP changes, as changes in money supply…
tsp216
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