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Macro Economics: Money and Growth

I used to think that for growth to take place , banks had to lend out more than they had (fractional reserve, credit) and that this would lead to an increase in aggregate demand and production.

Apparently, however, if velocity of money increases we can also have growth. Does this mean that if the money supply never increased (credit via banks stopped altogether) that the aggregate demand and subsequent growth to meet that demand could still occur?

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M924267

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