Money supply refers to the total amount of money, including currency and deposit money, present in an economy at a particular point in time. The standard measures to define money usually include currency in circulation and demand deposits. The record of the total money supply is kept by the Central Bank of the country. The change in the supply of money in an economy can affect the price level of securities, inflation, rates of exchange, business policies, etc. .

The components of the money supply are as follows:

• Currency such as notes and coins with the people
• Demand deposits with the banks such as savings and current account
• Time deposit with the bank such as Fixed deposit and recurring deposit

The money supply can be influenced by the Central Bank of the country. The money supply can be increased in an economy by purchasing government securities such as treasury bills and government bonds. The reverse happens when the central bank tightens the money supply, by selling securities on the open market, drawing liquid funds out of the banking system. Cash reserve ratio is an essential monetary policy tool used for controlling the money supply in the economy.

The money supply is tracked over time as a key factor in analyzing the health of the economy, pinpointing its weak spots, and developing policies to correct the weaknesses. In India, the RBI has four techniques of measuring money supply, including monetary aggregates and measures of both broad and narrow money.