Answer to Question #80433 in Macroeconomics for Tiyani Hlungwani

Question

How can the South African Reserve Bank can increase the quantity of money available

Answer 1

There are two ways to increase the quantity if money available:
1) The most simple way is increasing by printing. But it has negative effect like inflation.
2) The most effective way is Partial banking reservation - banking activity in which only some of the bank deposit is stored as bank reserves in the form of cash or other highly liquid assets available for withdrawal (withdrawal of money from the account). Most of the money deposited by the bank is given back in the form of loans, while leaving the possibility of withdrawing only a part of the deposits on demand.