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money supply

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)?

Solution Summary

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