The role of central banks in managing the money supply is essential for maintaining stable economic growth from "summary" of A Monetary History of the United States, 1867-1960 by Milton Friedman,Anna Jacobson Schwartz
The stability of economic growth relies heavily on the ability of central banks to effectively manage the money supply. Central banks play a crucial role in influencing economic activity through their control over the amount of money circulating in the economy. By adjusting interest rates, open market operations, and reserve requirements, central banks can impact borrowing, spending, and investment decisions of individuals and businesses. The management of the money supply by central banks is essential for maintaining price stability and controlling inflation. When central banks increase the money supply too rapidly, it can lead to inflation as individuals and businesses have more money to spend, driving up prices. On the other hand, if the money supply is too tight, it can lead to deflation and hinder economic growth as spending and investment decrease. By carefully monitoring economic indicators and adjusting monetary policy...
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