Money Defined: A Brief Review How the Money Supply Is Determined An economys money supply is controlled by its central bank The central bank Directly regulates the amount of currency in existence Indirectly controls the amount of checking deposits issued by private banks Copyright C 2003 Pearson Education, Inc Slide 14-7Copyright © 2003 Pearson Education, Inc. Slide 14-7 ▪ How the Money Supply Is Determined • An economy’s money supply is controlled by its central bank. – The central bank: – Directly regulates the amount of currency in existence – Indirectly controls the amount of checking deposits issued by private banks Money Defined: A Brief Review