The supply of money is the amount of money in circulation in a country. The supply of money depends on the following grounds:
- The monetary policy of the financial authority in which Central Bank increases or decreases the quantity of money.
- Credit policy of the Commercial Banks in which the banks make more credits.
- The public demand for Loans. This entails that the people’s demand for loan is high when sales and profits are high.
- The price of Income caring assets e.g. Bonds. When banks buy more bonds, it increases bank deposits.
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