Why is paper money so important?

They made the paper money as an offshoot of the invention of block printing. Block printing is like stamping. Some people used the process for quilts, but the government made ready use of it in printing money. They made paper money because their devalued coins were becoming too heavy to carry.

Regarding this, why is the currency so important?

Foreign exchange is the trading of different national currencies or units of account. It is important because the exchange rate, the price of one currency in terms of another, is a major determinant of a nation's economic health and hence the well-being of all the people residing in it.

What is the meaning of supply of money?

In economics, the money supply (or money stock) is the total value of monetary assets available in an economy at a specific time. There is strong empirical evidence of a direct relation between money-supply growth and long-term price inflation, at least for rapid increases in the amount of money in the economy.

What affects the supply of money?

The Federal Reserve affects the money supply by affecting its most important component, bank deposits. The Federal Reserve requires depository institutions (commercial banks and other financial institutions) to hold as reserves a fraction of specified deposit liabilities.

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