Question

Increasing the money supply in an economy will ______ the economic activity but it may also increase _____ 1st, Not chance, reduce ,accelerate. 2nd, Investments, inflation, employment.1st fills in first blank you need to pick one and same for 2nd in 2nd blank

Answer 1

Increasing the money supply in an economy can increase economic activity but it may also increase inflation, investments, and employment.

Step-by-step explanation:

Increasing the money supply in an economy can increase the economic activity as it stimulates borrowing for investment and consumption, shifting aggregate demand to the right.

However, an increase in the money supply can also increase inflation as more money is available, leading to higher prices in the economy.

Moreover, a loose or expansionary monetary policy that leads to lower interest rates and a higher quantity of loanable funds can increase investments and employment by making it more attractive for firms to borrow money and make investments.