Research Work

1. Where does the supply of money in a specific government comes from? How does a
government control its supply of money? How does the supply of money affect the
economy or economic activity of a country? Provide an example

 The supply of money comes from tax revenue - government sets a tax policy,
people pay their taxes and government has money, fines and penalties –
government write a law with a punishment of a fine or penalty, and collect money
from offenders with the threat of even more punishment, fees – government provide
a service that only government can provide, and charges a fee to cover the costs,
borrowing – government promises to repay loans at a healthy interest rate, raiding
funds – government collects money for something like social security and rather
than put in a bank account, revenue – some government engage in economic
activity and the money government earns from this is revenue and printing –
government has the power to print money, and can raise money simply by creating
it.
 The government control its supply of money through the help of Central Bank of
the country because they have the privilege to control the Monetary Policy of the
country, the key objective of Monetary Policy is that the total money in supply does
not exceed the supply of goods and services available in the country. Excess supply
of money is beneficial for entrepreneurs to invest in new businesses and industries
but it pushes up the prices of goods and services that causes inflation.
 The supply of money affects the economy or economic activity of a country when
the decrease in the money supply will lead to a decrease in consumer spending that
decrease will shift the demand aggregate demand curve to the left while in the
increase in the money supply will lead to an increase in consumer spending that
decrease will shift the aggregate demand curve to the right.
 example

2. How do you relate this with the current financial conditions of our country?