Money supply is really important for how our economy grows and stays stable. Central banks play a big part in this.

1. Economic Growth:

   • When a central bank adds more money to the economy, interest rates usually go down.
   • This makes it cheaper for people and businesses to borrow money.
   • When borrowing is easier, businesses are more likely to invest in new projects.
   • It also encourages people to spend more money.
   • All this spending and investing can create higher demand for products and services, which helps the economy grow.

2. Inflation and Stability:

   • But if there is too much money in the system too fast, it can cause inflation.
   • Inflation means that there is so much money chasing after fewer goods, making prices go up.
   • Central banks try to keep inflation in check while also helping the economy grow.
   • They adjust interest rates to help manage the money supply.

3. Overall Balance:

   • A moderate rise in money supply can create a stable, growing economy.
   • On the other hand, if things get out of balance, we could end up with economic problems like high inflation or stagnation, where the economy isn't growing at all.

In short, central banks carefully manage money supply, economic growth, and stability to keep our economy healthy.