What is MONEY SUPPLY?

What other factor(s) outside interest rates can cause a decrease in money supply?

• The central bank controls money supply, what then would cause a decrease in money supply if the central bank never interfered?

• Answer:

  The central bank can change the required reserves for banks or pay interest on the reserves so the banks will not lend all that is allowed. Banks can also decide to keep excess reserves when they fear a larger than normal amount of loans will default. People can also keep their savings under their mattress or instead of depositing it in banks