Answer to Question #93108 in Macroeconomics for Ankit

Question

I have a question. Is circulation of money in an economy is worth for increasing the GDP or for development. If yes, then why?

Answer 1

Yes. The increase in the money supply is mirrored by an equal increase in nominal output, or Gross Domestic Product (GDP). In addition, the increase in the money supply will lead to an increase in consumer spending. This means that the country will record an increase in GDP Value due to the increase in money circulating in the economy.