# Is money supply affected by the stock market?

Do stock prices have any effect on the money supply of an economy? Please provide a simple example if possible.

Intuition suggests there is more money around when prices are high (consider for instance the dotcom boom). I guess the answer may be dependent on what definition of money supply one uses (M0-M4).

The short answer to your question is no, stock prices have no direct effect on the total amount of money in an economy, just as the price of apples has no effect on the total amount of money in an economy. The wikipedia page on money has an explanation of the various ways you might define money, and none of them include the valuation of stocks. Here's the requested simple example: Say there are \$100 in circulation. There is one stock traded, and it is valued at \$10. Then, it is valued at \$20. But there is still \$100 in circulation.