Changes in the amount of money available can have a big effect on both people and businesses. When the central bank adds more money to the economy, it usually results in lower interest rates. Here’s how this impacts everyone:
For Consumers:
Lower Borrowing Costs: When loans are cheaper, more people want to buy homes or cars.
Increased Spending: With more money in the economy, people feel better about spending and are more likely to shop.
For Businesses:
Easier Access to Credit: When interest rates are lower, businesses can afford to borrow money for expansion or new projects.
Higher Demand: When consumers spend more, businesses can sell more and make bigger profits.
In short, when the money supply increases, it often helps boost economic activity.
Changes in the amount of money available can have a big effect on both people and businesses. When the central bank adds more money to the economy, it usually results in lower interest rates. Here’s how this impacts everyone:
For Consumers:
Lower Borrowing Costs: When loans are cheaper, more people want to buy homes or cars.
Increased Spending: With more money in the economy, people feel better about spending and are more likely to shop.
For Businesses:
Easier Access to Credit: When interest rates are lower, businesses can afford to borrow money for expansion or new projects.
Higher Demand: When consumers spend more, businesses can sell more and make bigger profits.
In short, when the money supply increases, it often helps boost economic activity.