State reasons why an increase in money supply may not necessarily lead to inflation.
- When there is an increase in foreign exchange earnings from export and tourism
- When the marginal propensity to save (MPS) is high
- When demand for goods and services reduce
- Where there is high rate of interest on capital
- Where there are effective price control measures in economy
- Where taxes are high on income
- Where there is strict financial discipline
- Where there is large subsistence sector
- Where there is an increase in the volume of imports
- Where there is high level of liquidity preference.
- If the level of economic growth is equal to the level of money supply growth
CATEGORIES Economics
TAGS Dr. Bbosa Science
