In the context of money supply, this refers to the fact that the demand for money is determined by the economic process (endogenously). The level of demand is primarily determined by – the overall volume of economic activity, – the opportunity costs of holding money and – the corresponding expectations of economic agents. – Thus, the money supply is not exogenously determined by the central bank (as can also be read in some textbooks), but is merely controlled by the central bank. – See Credit Granting, Compensatory.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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