DEFINITION of 'Active Money'

The total value of coins and paper currency in circulation amongst the public. The amount of active money fluctuates seasonally, monthly, weekly and daily. In the United States, the Federal Reserve Banks distribute new currency for the US Treasury Department. Banks lend money out to customers which becomes classified as active money once it is actively circulated.

BREAKING DOWN 'Active Money'

Active money is all the coins and paper currency in the hands of the public. Due to the high demand from abroad, the majority of US cash in circulation is outside of the United States. The variable demand for cash equates to a constantly fluctuating active money total. For example, people typically cash paychecks or withdraw from ATMs over the weekend, so there is more active cash on Monday than on Friday. The public demand for cash declines at times - following the holiday season, for example.

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