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The Bangladesh government has revised its current bank borrowing target upward to Tk72, 953 crore. How...

The Bangladesh government has revised its current bank borrowing target upward to Tk72,

953 crore. How does this initiative will affect the money market equilibrium?

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Answer #1

Since the Bangladesh government has revised its bank borrowing target upward upto 953 crore this means that when the borrowing will be increased in the banks this will result in increase in money supply in the market . In other words increase in bank borrowing will lead to increase in money circulation in the market which that money supply curve will shift rightward. Increase in money supply means people will have greater amount to spend to goods and services.

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