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What happens when there is decrease in money supply?

What happens when there is decrease in money supply?

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william
Aggregate demand will increase. The reverse will be true when money supply decreases. That is a decrease in the money supply will lead to a decrease in the amount of money that people and firms will hold and as a result they will spend less. This will cause aggregate demand to decrease.
steve williams answered the question on January 23, 2018 at 11:47

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