How is the money supply defined in economics?

The money supply in economics refers to the total amount of monetary assets available in an economy at a specific time. This definition encompasses various forms of money, including cash, coins, and balances held in checking and savings accounts. Understanding the money supply is crucial because it influences inflation, interest rates, and overall economic activity. Central banks manage the money supply to ensure economic stability and growth through various monetary policy tools.

Other options, while they touch upon important economic concepts, do not accurately capture what the money supply is. The total amount of goods available relates more to the production capacity and does not specifically pertain to monetary assets. The balance of payments is an accounting record of all economic transactions between residents of a country and the rest of the world but does not define the money supply. Currency exchange rates refer to the value of one currency in relation to another, which also is not a definition of money supply but rather a measure of value in foreign exchange markets.