Money Supply

Introduction

In Introduction to Economics, assumed that the money supply
is controlled directly by the central bank. This was a useful
simplification but literally not true. The central bank’s control of
money supply is only indirect. Three groups actually affect the
country’s money supply. They are the central bank, commercial
banks and the public.

In this topic we want to (i) understand how banks create
money (ii) look at the ways the central bank can control the money
supply in the country; and (iii) understand why the central bank
does not have a precise control of the country’s money supply.