When a country's central bank increases the money supply a unit of money?

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2026-03-28 15:00

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When a country's central bank increases the money supply, it typically leads to lower interest rates, making borrowing cheaper and encouraging spending and investment. This can stimulate economic growth in the short term. However, if the money supply grows too quickly, it can also lead to inflation, decreasing the purchasing power of money over time. Ultimately, the effects depend on various factors, including the economy's capacity and the existing demand for goods and services.

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