👉 Inflation fluid, often referred to as a monetary base or M1 in economic terms, is the total supply of money circulating within an economy, primarily consisting of physical currency (M1) and demand deposits (M2) held by the public. This concept is central to understanding how money supply influences inflation, as an increase in inflation fluid can lead to higher prices if not matched by a corresponding increase in the quantity of goods and services available. Central banks manage inflation fluid through monetary policy tools like adjusting interest rates or conducting open market operations, aiming to maintain price stability and economic equilibrium.
