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__________ is the main source of the money supply in an economy.
Central Bank
Commercial banks
Both a) and b)
Government
- Central Bank:
- The Central Bank regulates the money supply.
- It issues currency and implements monetary policy.
- Commercial Banks:
- They create money through the lending process.
- When they give loans, they expand the money supply via deposit creation.
- Both a) and b):
- Correct Answer: Both the Central Bank and Commercial Banks are vital.
- Together, they regulate and create money in the economy.
- Government:
- They influence but do not directly create money.
- Fiscal policy affects the money supply indirectly.
By: santosh ProfileResourcesReport error
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