2007-01-20 06:37:26 · 3 answers · asked by Anonymous in Social Science ➔ Economics
Money supply is half of the equation for it's value (supply and demand) A change in supply is a change in the value. If your money value drops, then it takes more of it to buy goods, or inflation. So they control money supply for input into inflation, keeping in mind there are other factors they must also balance. Like if the value of money is too high, other countries can't afford the goods you produce and it hurts the economy.
2007-01-20 09:45:38 · answer #1 · answered by JuanB 7 · 0⤊ 0⤋
Wel llets look at it like this:
If we didn't have money then all the natural resources would be kept by the nearest country and we would be at war with other countries all the time to obtain them.
If we did then we would be buying off the supplies we need from other countries instead of waging war.
Make enough sense?
2007-01-20 14:41:14 · answer #2 · answered by Durr 5 · 1⤊ 0⤋
mainly to control inflation, exchange rate.
2007-01-21 07:42:45 · answer #3 · answered by val 2 · 0⤊ 0⤋