Money And Measures
Money plays a role of good or service which plays a role of medium of exchange between parties in transactions. It also plays a role of a unit of account which stores value in itself and process the transactions between the two parties. So the role of money goes beyond just being a piece of paper as its makes the transaction or trade between two parties successful by acting as a medium of exchange (Neuman & Medvinsky, 1996). The use of money also replaced the old barter system which was based on exchange of goods between the two parties in mutual trade. With the use of money which has been recognized as a medium of exchange, all the other problems have been solved and the economy becomes more efficient with having one medium of exchange for any type of trade.
While discussing about the total money supply which is also known as money stock is nothing else just the total sum of monetary assets available in the nation’s economy at one point of time. There are different types of definitions and descriptions available with respect to money but ultimately it is sum of circulated currency and total demand deposits.
With respect to different measures of money supply the classification has been done accordingly between narrow to broader measures. The narrow measures of money supply involve around the most liquid ones which are used primarily to spend like cheques or currency whereas the broader measure includes the ones with less liquidity like fixed deposits or time deposits (Solomon, 1997).