Monetary policy affects the money supply from "summary" of Principles of Economics by Saifedean Ammous
Monetary policy plays a crucial role in regulating the money supply within an economy. By adjusting interest rates and influencing the availability of credit, central banks can effectively control the amount of money circulating in the financial system. When central banks decide to lower interest rates, borrowing becomes cheaper, encouraging businesses and consumers to take out loans. This influx of new money into the economy leads to an increase in the overall money supply. Conversely, when central banks raise interest rates, borrowing becomes...
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