Question

Why does the Money supply need to be controlled?

Answer 1

Answer,

We need to control money supply in our economy because when the supply of money increased in an economy then the interest rate will fall it helps to increase investment activities but negative side is when the supply of money increased in an economy,the demand for goods will increase if the producer didn't produce much demanded goods then the price of those good will rise and this leads to inflation people have money with them so they can able to demand Good even though the price increases. Huge increase in money supply will cause to inflation show the government and Monetary Authority should control the money supply through fiscal and monetary policies.