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Topic: how supply of currency decided - page 2. (Read 364 times)

legendary
Activity: 2016
Merit: 1106
August 25, 2019, 12:57:30 PM
#6
how does the currency supply of a country is decided, I searched got that it should be equal to GDP is this true or it's an ideal condition
ideally , according to the pseudo science economics , it is determined by formulas and the supply of a currency is determined by the domestic demand for imports from abroad
in reality , it is decided by the Central banks and the combination of the military power and the influence of a particular country
the US , for example , can print trillions of dollars and "sell" them around the world for resources
i.e. basically , you give , say Russia money for their oil and then they have to buy your treasuries for a fixed percentage of what they received , increasing the US debt
the countries that refuse to do so or are trying to oust dollars from their systems end up like Lybia , Iraq , Venezuela  and other countries ( usually rich in oil or any other resource and suffering from an acute lack of democracy , according to the civilized world )

 
full member
Activity: 854
Merit: 104
August 25, 2019, 11:53:19 AM
#5
how does the currency supply of a country is decided, I searched got that it should be equal to GDP is this true or it's an ideal condition
As far as I know, you can print out paper money in the state in the amount of gross income growth for the year, as well as the amount of increase in national gold and foreign exchange reserves. In addition, paper money is additionally printed on the amount of worn out and replaced banknotes. Also, in practice, they are allowed to print another five percent of inflation, which is considered the norm.
legendary
Activity: 3080
Merit: 1500
August 25, 2019, 10:38:22 AM
#4
how does the currency supply of a country is decided, I searched got that it should be equal to GDP is this true or it's an ideal condition

The scope of your question is much bigger and can't be suitably replied here. Rather, I would request you to watch the below video from Youtube.

https://www.youtube.com/watch?v=FVXoijm6eZ8

This video will at least give you an idea even though money printing and circulation requires a combination of many factors. Hope this helps at least to understand the basiscs!
member
Activity: 952
Merit: 41
August 25, 2019, 09:15:45 AM
#3
The growth domestic product of any country determines the value of it currency on the stock exchange and also the market value inflation rate and so on.
hero member
Activity: 3094
Merit: 929
August 25, 2019, 08:24:14 AM
#2
how does the currency supply of a country is decided, I searched got that it should be equal to GDP is this true or it's an ideal condition

No,the currency supply shouldn't be equal to the GDP.There was a simple formula about that topic,but I have to search through my Macro-economy and finance books.
As far as I remember,the classic equation was M.V=P.Y or M=1/V.(P.Y)
Irving Fisher was the author of the classic quantity theory of money.You will have to read more about him.
newbie
Activity: 22
Merit: 0
August 25, 2019, 07:22:14 AM
#1
how does the currency supply of a country is decided, I searched got that it should be equal to GDP is this true or it's an ideal condition
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