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The Money System, Money Growth and Inflation (Bank and Money Supply (Money…

- - - - When BNM sells the government bonds, the money supply decreases.
      - When BNM buy the government bonds, the money supply increases.
    - - Increasing the discount rate decreases the money supply.
      - Decreasing the discount rate increases the money supply.
    - - Increasing the amount of reserve requirement decreases the money supply.
      - Decreasing the amount of reserve requirement increases the money supply.
- - - - When there is high AD which is in excess of the economy's ability to supply. AD>AS=it pull the general price level up.
    - - Increases in demand of factor production cause the increases in wages and cost production, then the producer push this into the price of products.
    - - Increases in cost of importer raw materials cause the increases in cost of production, then the producer push this into the price of product.