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    money supply

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    Given that money supply (and money base) in an economy increases as companies borrow from banks, does a decrease (or increase) in oil prices not affect the growth of an economy. - if the price of oil goes down, won't companies borrow less to expand , thereby allowing less new money to be created?

    Alternatively, if oil prices increase, won't companies need to borrow more thereby creating more money than before (through loans)?

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    Solution Summary

    Discuss money supply (and money base) in an economy.