Difference between stock of money and money supply

ADVERTISEMENTS:

In ordinary language, money supply means the amount of total legal tender money in a country at a point of time. Actually speaking money supply is nothing but stock of money.

Second meaning of supply related to money is not in the sense in which supply of a commodity is interpreted Supply of a commodity relates to the prevailing market price but there is no determinant like that for supply of money.

In reality, supply of money is the stock of money which is used for buying goods and services at a point of time.

ADVERTISEMENTS:

Therefore, money supply means the total quantity of money which includes notes and coins in circulation and bank money.

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