how is the money supply determined 
a central bank regulates the amount of available in a country through monetary policy a central bank can undertake an expansionary or contractionary policy an expansionary policy aims to increase the money supply for example the central bank might engage in open market operations that means it will purchase short term u s treasury bills using newly minted money that money thus enters into circulation a contractionary policy would require selling treasuries that removes some of the money circulating in the economy 