Money supply is the total amount of currency in circulation and demand deposits in a country's economy. It includes physical currency, such as coins and banknotes, that is in circulation and readily available for transactions. It also includes demand deposits, which are funds held in checking accounts that can be withdrawn at any time by depositors.
Money supply does not include time deposits or saving deposits, as these are not considered to be immediately available for transactions. Time deposits are funds held in bank accounts that require a certain period of time to pass before they can be withdrawn without penalty, while savings deposits are typically held for longer periods of time and may have restrictions on how often withdrawals can be made.
Therefore, the correct answer is - "currency in circulation and demand deposits".