Question

How change in money supply can contribute to stability in the economy?

Answer 1

By increasing the amount of money in the economy, the central bank encourages private consumption. Increasing the money supply also decreases the interest rate, which encourages lending and investment. The increase in consumption and investment leads to a higher aggregate demand.

Answer 2

Answer:

Explanation:

Increasing the money supply also decreases the interest rate, which encourages lending and investment.