Currency is issued by the central …
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Gaurav Seth 5 years, 8 months ago
Money supply has two components: Currency and demand deposits with commercial banks. Currency is issued by the central bank, while deposits are created by commercial banks by lending money to the people. In this way, commercial banks also create money. Commercial banks lend money mainly to investors. The rise in investment in the economy leads to rise in national Income through the multiplier effect.
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