The money supply should never grow beyond the potential demand. Growing beyond has a tendency to cause inflation and other economic pressures.
tight money policy
It would NOT shrink the money supply, it would just cause the supply of money to grow at a slower pace. So it would decrease the rate of growth of the money supply.
law of supply
Decreases the money supply
When money supplies grow too rapidly, and product supply doesn't keep up with them, the value of money falls.
The money supply should never grow beyond the potential demand. Growing beyond has a tendency to cause inflation and other economic pressures.
tight money policy
This is known as money, or currency, stability. Prices, income and economics must be stable and constant in order for the money supply to grow.
It would NOT shrink the money supply, it would just cause the supply of money to grow at a slower pace. So it would decrease the rate of growth of the money supply.
law of supply
Decreases the money supply
there are four measure of money supply in india,
factors which determine money supply is: open market operations, variable money supply bank rate policy.
An increase in the money supply shifts the money supply curve to the right. If you look on your graph, you will see that an increase in money supply will cause the interest rate to decrease. Here's why: Fed increases money supply-->excess supply of money at the current interest rate -->people buy bonds to get rid of their excess money-->increase in the prices of bonds --> decrease in the interest rate.
If there is a increase in money supply that is causing price to rise money only does one thing. The money that is taking is used for supply.
If there is a increase in money supply that is causing price to rise money only does one thing. The money that is taking is used for supply.