eli5: How does an economy grow if the money supply doesnt increase in that same year? In gold standard suppose, gold reserves are not increased but economy still manages to grow. How is that possible, how is an economy growing on a stable money supply?

Question

eli5: How does an economy grow if the money supply doesnt increase in that same year? In gold standard suppose, gold reserves are not increased but economy still manages to grow. How is that possible, how is an economy growing on a stable money supply?

In: 339

Answer 1

Money is just a medium to more easily trade wealth. It’s the wealth that grow.

Wealth is anything of value for human, so it’s the food, minerals, manufactured product or services. Everything someone extract, create or offer something of value for other human, it’s creating wealth. The money is not relevant in that.