If the central bank expands the money supply, then under certain circumstances – above all: there are underutilized capacities – this can lead to a revival of the economy as a whole. – The assumption that – slumps in the real economy such as a sudden stop in exports (resulting in a war among trading partners or supply routes) amplify – because this also affects the financial market, – which in turn causes repercussions on economic activity (the idea that adverse shocks to the economy may be amplified by worsening financial market conditions and could thus initiate a depressive tumble). – See accelerator, financial, monetary policy, domino effect, stimulus, market impact, money-matters theorem, government debt.
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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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