Listen to a Business English Dialogue About Currency in circulation
Arianna: Hi Lydia, do you know what “currency in circulation” means in economics?
Lydia: Yes, it’s the total amount of physical money, like coins and banknotes, that’s being used in the economy at a given time.
Arianna: That’s right. It includes money held by the public and by banks for transactions.
Lydia: Why is currency in circulation important for the economy?
Arianna: It plays a role in influencing inflation, as an increase in the amount of currency in circulation can lead to higher prices for goods and services.
Lydia: So, does the government or central bank control the amount of currency in circulation?
Arianna: Yes, they do. The central bank can adjust the money supply through actions like printing more money or conducting open market operations.
Lydia: How does the central bank decide how much currency to put into circulation?
Arianna: They consider factors like economic growth, inflation targets, and the stability of the financial system when making decisions about the money supply.
Lydia: Does currency in circulation include digital forms of money like bank deposits?
Arianna: No, it typically refers only to physical cash. Digital money held in bank accounts is considered part of the broader money supply.
Lydia: Got it. So, currency in circulation is just one aspect of the overall money supply in the economy.
Arianna: Exactly. It’s an important measure, but it’s not the only form of money that people and businesses use for transactions.
Lydia: Thanks for explaining, Arianna. It’s interesting to learn about how money works in the economy.
Arianna: No problem, Lydia. Understanding these concepts can help us make sense of how the economy functions.