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Money Supply and Demand Theory Explained

The supply and demand theory of money explains how the value of currency is determined by the balance between supply and demand. Central banks control the money supply while factors like economic growth and interest rates affect demand. The law of demand governs consumer behavior, with factors like substitution and income effects influencing buying decisions. The relationship between price and quantity demanded is depicted by demand curves and schedules. Additionally, factors influencing demand and supply, as well as market equilibrium, play crucial roles in the economy.

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Money Supply and Demand Theory Explained

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