When an ADI invests in a financial instrument issued by another ADI the stock of private money and the stock of central bank money are not affected.
Question
Solution 1
When an Authorized Deposit-taking Institution (ADI) invests in a financial instrument issued by another ADI, it is essentially transferring funds from one institution to another. Here's a step-by-step explanation of why this does not affect the stock of private money or central bank money:
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