THE IMPACT OF MONEY SUPPLY ON INFLATION IN IRAQ FOR THE PERIOD (2007-2022)

Аннотация

INTRODUCTION economic activity, which affects income, The money supply is one of the components of the production, interest, employment, and inflation. macroeconomy and is of great importance in https://www.theamericanjournals.com/index.php/tajmei 135 THE USA JOURNALS THE AMERICAN JOURNAL OF MANAGEMENT AND ECONOMICS INNOVATIONS (ISSN- 2693-0811) VOLUME 06 ISSUE01 Every increase in the money supply leads to a rise Fourth: Hypothesis of the Study in the general level of prices and the relationship The research is based on the hypothesis that there between the money supply. Inflation is a direct is a direct relationship and influence between relationship because, according to classical money supply and inflation, which leaves positive analysis Friedman’s monetary analysis, Every effects on the growth rates of the economy. increase in the quantity of money over the number of goods and services leads to a rise in the general Fifth: Methodology of the Study level of prices and a decrease in the value of money. The research relied on the inductive approach and It is also the primary tool the central bank uses in used the general descriptive analytical method. directing its monetary policies towards the Sixth: Limits of the Study internal and external stability of the national economy, and the supply of money varies from one 1. Spatial boundaries: the Iraqi economy. place to another due to the differences in Banking 2. Time limits: (2007 - 2022). habits and economic and social development among countries. The first topic The term money supply refers to the total Theoretical framework balance of local means of payment owned by the The first requirement: the concept and public (individuals, companies), and the monetary components of the money supply authority (the central bank) use the money supply First: The idea of money supply: to achieve macroeconomic goals (growth, employment, balance, and price stability). It is the sum of the means of payment circulating within the economy during a specific period (1). First: Problem of the Study This type prevailed in the eighties of the last The research problem is to answer the following century and included currency in circulation + questions: current deposits in commercial banks). Keynes 1) What is the relationship between money supply defined it as the quantity of money, through which and inflation? we can know it as money with Direct purchasing power, i.e., the ability to convert to all goods and 2) Is there a direct relationship and effect between services available for exchange immediately; in money supply and inflation rates? other words, it is the ability to discharge all debts 3) What are the effects of increasing the money (2). supply on inflation? Second: Components of the money supply: Second: The importance of the Study 1) Narrow money supply (M1): The importance of the research comes from the It is the sum of the means of payment circulating role of money supply in the national economy, and within the economy during a certain period. This it is one of the monetary policy tools that the type prevailed in the eighties of the last century central bank uses to finance economic activities, as and included (currency in circulation + current it contributes to achieving economic growth, deposits in commercial banks) (3): gaining full employment, and achieving stability. M1= CC + CD Third: Objectives of the Study Since: 1) Definition of money supply and inflation as a theoretical concept. CC represents currency in circulation, CD: current deposits: 2) Identify the components and forms of inflation. Broad money supply (M2): 3) Analyzing the effect of money supply on inflation according to economic theory. It is known as local liquidity, which began to be enjoyed in the 1970s. This type is represented by https://www.theamericanjournals.com/index.php/tajmei 136 THE USA JOURNALS THE AMERICAN JOURNAL OF MANAGEMENT AND ECONOMICS INNOVATIONS (ISSN- 2693-0811) VOLUME 06 ISSUE01 the narrow money supply, in addition to time sector. deposits and savings deposits, which are called 3) Net items (budget paragraph), which include quasi-money that can be converted into liquid cash (paid-up capital accounts, retained reserves, fixed quickly and with the most minor loss. Thus, the assets, instruments in the collection, closed money supply in the broad sense is equal to (1): accounts, and bills in the group), as well as other M2 = M1+ TD + SD unclassified assets and liabilities. The budget paragraph is obtained by subtracting the net Since: assets—others from the capital account and TD: time deposits, SD: savings deposits reserves. 1) Broader money supply (M3): Fourth: The Central Bank: The money supply, in the broadest sense, refers The size of the monetary base is determined by the to the liquidity of the economic community as a currency in circulation, C, in addition to the total whole. The money supply is determined based on reserve in the banking system, MB= C+T.R local liquidity. S