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Understanding the Measurements of Money Supply  –  By Prof.  Simply  Simple ,[object Object],[object Object]
The life of money looks so simple when it is just moving from one hand to another.  But what about the actual economy, where countless number of people are using different units of money for small and big transactions? How do we actually calculate the velocity of money in a real economy?
[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],Remember…
[object Object],[object Object],Now…
[object Object],[object Object],[object Object],[object Object]
But how does one calculate the different measurements of money supply such as M0, M1, M2, M3 and so on ?
[object Object],[object Object],[object Object],Here’s how…
[object Object],[object Object],[object Object],But you may ask, which one is the true velocity of money, 10 or five?
[object Object],[object Object],[object Object],[object Object],Which brings me to my original point…
How Money Moves! Cloth merchant gets a haircut from the barber Barber buys bread from the baker Baker buys clothes from the cloth merchant Rs. 100 Rs. 100 Rs. 100
[object Object],[object Object],[object Object],To Sum Up
[object Object],[object Object],Do write to me at  [email_address]

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Measurements of money supply

  • 1.
  • 2. The life of money looks so simple when it is just moving from one hand to another. But what about the actual economy, where countless number of people are using different units of money for small and big transactions? How do we actually calculate the velocity of money in a real economy?
  • 3.
  • 4.
  • 5.
  • 6.
  • 7. But how does one calculate the different measurements of money supply such as M0, M1, M2, M3 and so on ?
  • 8.
  • 9.
  • 10.
  • 11. How Money Moves! Cloth merchant gets a haircut from the barber Barber buys bread from the baker Baker buys clothes from the cloth merchant Rs. 100 Rs. 100 Rs. 100
  • 12.
  • 13.