1. Money Supply
This is the total stock of money available in an economy at a point in time.

2. The money supply includes:
Notes and coins
Money in a current account in the bank
Money in a savings account
Money in a building society
If it is tied up for a long time i.e. you can’t withdraw it for 2 years it is not classed as money.

3. FUNCTIONS OF MONEY
It can be used as a means of exchange or to buy resources
It is a measure of value e.g. 1 mars bar = 40p
It is a store of value e.g. it keeps its value

4. WHAT IS GOOD MONEY? It should be ACCEPTABLE
It should be DURABLE and hard-wearing
It should be PORTABLE and easy to carry
It should be DIVISIBLE i.e. you can give change
It must be SCARCE

5. SAVINGS Why do people save? To buy a good in the future e.g. a car
In case something goes wrong e.g. lose job
To plan for retirement
To gain interest from the bank

6. Make a list of your own money supply. Can you calculate the total?
How would you find out the money supply of the UK economy?
Why is a £1 coin ‘good money’?
Why is a pig not ‘good money’? Why is a stone not ‘good money’?
What would be the impact on the economy if lots of people started to save more?

7. SMART THINKING
If the supply of money was to increase significantly, what would happen to its value?