19. Money Supply and Interest Rates

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In this step, you'll learn about monetary expansion and contraction and how they relate to the money supply and the economy. Monetary expansion is when the money supply increases, causing the demand for loanable funds to exceed the supply and driving interest rates down. Monetary contraction is when the money supply decreases, creating a shortage of loanable funds and driving interest rates up. Both of these can have a significant impact on GDP, influencing investment and the overall economy.