Definitions of the money supply and the distinction between narrow money and broad money
The money supply is the total amount of money in an economy. Narrow money covers only the most liquid forms, like cash. Broad money adds in bank deposits and other less immediately accessible funds.
Formula
Broad Money (M4) = Narrow Money (M0) + Bank Deposits + Near-Money Assets
Real World
After 2009 quantitative easing, the Bank of England's asset purchases expanded bank reserves (narrow money, M0) dramatically, but broad money M4 grew more slowly as banks rebuilt capital rather than lending those reserves out.
Exam Focus
Specify which measure (M0, M1, M4) you mean — generic references to 'money supply' lose precision and marks on definition questions.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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