How does banking affect the money supply?

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04-09-2017
Social Studies

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How does banking affect the money supply?

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mandy76 mandy76 · Answer 1 · 2017-09-04T19:36:14+02:00

mandy76 mandy76

04-09-2017

Central banks affect the quantity of money in circulation by buying or selling government securities through the process known as open market operations. When a central bank is looking to increase the quantity of money in circulation it purchases government securities from commercial banks and institutions.

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