The money supply is influenced by various factors from "summary" of Economics of Money, Banking and Financial Markets, Business School by Frederic S. Mishkin
The money supply in an economy is not determined by a single factor but is influenced by a combination of various elements. These factors can range from the actions of central banks to the behavior of individuals and businesses in the economy. One of the primary factors that influence the money supply is the actions of the central bank. Central banks have the power to control the money supply through the implementation of monetary policy. By adjusting interest rates, open market operations, and reserve requirements, central banks can either increase or decrease the money supply in the economy. Another important factor that influences the money supply is the behavior of commercial banks. Commercial banks play a crucial role in the money creation process through the process of fractional reserve banking. When banks receive deposits f...
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