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What is one reason why a government will deliberately inflate its national money supply?

2 Answers

4 votes

To attract oversea investors and working immigrants

User Splendiferous
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5 votes

Answer:

To increase aggregate demand

Step-by-step explanation:

Inflation of national money supply is one of the tools of the monetary authority, that is the central bank of a country to stimulate aggregate demand. Government resort to increasing the money supply when it embarks on expansionary monetary policy to achieve certain macroeconomic goals or objectives. some of the monetary policy tools used to achieve this are : interest rate, reserve requirement, e.t.c.

User Evan MJ
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