Q1. Describe the method of credit creation by the commercial banks. Describe in this context the statement that ‘an individual bank consists of little capability to expand the money supply unless all the other banks expand in step’.
Q2. Describe the method of the multiple expansions of bank assets and liabilities. Describe all the factors which influence money supply?
Q3. Find out the determinants of money supply in the economy? In which manner the aggregate money supply might be dependent on the rate of interest?
Q4. Describe how the creation of credit by commercial banks can encompass multiplier effect on the money supply.
Q5. Describe in brief how high powered money might be created by a central bank. describe why does this outcome in an even greater raise in the money supply?