Answer to Question #124758 in Macroeconomics for Ekeme Boris

Question

Who controls the money supply and how

Answer 1

Central banks

Central bank controls the supply of money by buying or selling government securities which is archieved through open market operations.

If central bank wants increase the amount of money in circulation, it will do so by buying government securities from commercial banks.

And if wishes to reduce the supply of money will do so by buying government securities from institutions

Central bank also has the power to control the interest rates for commercial banks.

It's also influences the printing of money.