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What is Economic Impacts of Money Supply Changes about?

For constant output, if real money supply exceeds real money demand, the real interest rate that clears the asset market will fall. Rapid economic growth may be associated with inflation if an increase in aggregate demand outpaces the increase in aggregate supply. The deep recession in many industrialized countries during 1973-1975 with simultaneous high inflation was likely the result of a supply shock rather than a demand shock.

Author

M Bilal Saleem

Language

EN