BackThe Money Supply on the Graph definitions
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1/14BackSkip to main contentBackMoney Supply Curve
A vertical line on the money market graph representing a fixed quantity of money set by the central bank, regardless of interest rate. Federal Reserve
The central authority responsible for determining the total amount of money available to the public through policy actions. M1
A measure including currency in circulation and checking account deposits, representing the most liquid forms of money. Currency in Circulation
Physical cash held by the public, not including reserves held by the central bank or in vaults. Checking Account Deposits
Funds in bank accounts that can be accessed on demand and are included in the most liquid money measures. Open Market Operations
Central bank activities involving the buying or selling of government securities to adjust the amount of money in the economy. Treasury Securities
Government-issued debt instruments, such as T-bills, used in monetary policy to influence the money supply. T-bills
Short-term government securities traded by the central bank to manage liquidity and interest rates. Equilibrium Interest Rate
The rate at which the quantity of money demanded equals the quantity supplied in the money market. Money Demand Curve
A downward-sloping line showing the relationship between the interest rate and the quantity of money people want to hold. Quantity of Money
The total amount of funds available for use by the public, determined by central bank policy. Interest Rate
The cost of borrowing money, serving as the 'price' in the money market and influenced by monetary policy. Liquidity Preference
A theory explaining how the supply and demand for money interact to determine the equilibrium interest rate. Monetary Policy
Central bank strategies, mainly involving open market operations, aimed at influencing economic activity through money supply adjustments.
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