What does the money supply refer to?

The money supply refers to the total amount of monetary assets available in an economy at a specific time. This encompasses various forms of money, including currency, coins, demand deposits, and other liquid assets that are readily available for spending and can be used for transactions. Understanding the money supply is critical for analyzing economic activity because it influences overall spending, investment, and price levels.

In contrast, the other options do not accurately encompass the broader definition of money supply. Limiting the definition to only currency and coins ignores other significant components like bank deposits. The total value of commodities traded relates more closely to trade and exchange rather than the concept of money supply, which focuses on liquidity and monetary assets. Interest rates, while important for understanding the cost of borrowing and the return on savings, do not directly define the quantity of money available in an economy. Therefore, the correct choice captures the full scope of what constitutes the money supply.