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 Topic Date

T h e M o n e yM u l t i p l i e r

to
due

supply
money
the
in
changr
Money Maltiplier
mempotential

Gives
the
achang r e r v e s

mupuerrequired
reserve
ratio It is
a

changes ratiofor that

Money Multiplier
givenshows how much
money

Patential a

Because the change in

the the
MS-mx MB
Actualchang

tbe Doney

moneta ry monet money

ary base.supply
meanin g mul tiplier
Actualmaney

base
change in MS called larger than (1)
is is
p l e r

that a
by change in "high one, the
more MB
than 1%.bypower
1% ed money",
leads to
a

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 MuLTIPLIER
MONEYMyLTIPLIER

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onthary
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at
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tchal zan e t 4 o u h a i r s L e t h tcause

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 Topic Date

Step tep
1:
tpglarattor
Suppese T
dtnt
YLSOVLS Caxncs ot
2
a epen mazkut operahn,

bey 1 p bankTe bo
1e bank

ard The
dpsits t in teta catasL
ws bank ord oe inhe menty Seppl
h btztulzySS precssSun tatcontnuts, is he Sum thmctas
servis tg ba Sees unhe he preces att tachsep
Canne be conh AM 1D0t9ptS
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 Topic

FNpplicatin

oney

Mutiplier
 Moxd MuLhplier /Rsorv Ratio
Resov Rahe 25 /100 4

sntyMulhplic /C/40
h e Meney Muth plier is hus

Lbs Compute 1heexcessesres Lz Jards 1 Can

lot LCand
ExcEes Besevves Bank depasiis
-LsevRaho Eank dupe
3000 C30002s L)
2250

ncztase in nt SuppkAddcharalmenty Loan ld at R Manty

Mulhplix

2250*4

qooo
.The answey is 9000.

Tis Tis uillincdast he amaun Manty in 1he Uh

becausa bigha noandy ulhplier Lds mexe
CAsh beurggntrstedjaYLvySigle dellar
Teserves.
 Tor Date

Apr-08
Money Miktpler
Aug081
Jn-08
in-08

Oct-08

Dec-08

Feb-09

Apr-09

Raphica Jn-00-
Aug-D9
Dct-09

Deo09
Feb-10

$1,000
$900
$800
Aepresenialion
The expansion of $100 through fractonal-reserve banking
with varying reserve requlrements
(accumulatlon of deposits)

Reserve
Requlrement
$700 10%
$600 20%
30%
$500
40%
$400
-50%
$300
$200
$100
$0
ABCDEFGHI JKLMNOPQRS TUVWXY2
individual deposits
 nenical:

-pxplanation:
MoneyE
Mutilglten:
 LRR is non Sa
keep
Con ose he Mm 20' X
he ema um wbldlh Ls mons
200
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mtns as Rs
acL@Ut ISocehually ntining Rs 1he bankloooo hih SB
Ho
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ake
ven
ven
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payments Now YY 1sisname ard Cash Cash, but
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om
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ba
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ad
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te Aes thardugh
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depesit cidd
pcess e Called
fere depaiis he hiss is Called
e c e e 22
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Na demar de posit bbcent_ MONEY MULTIPLIER

deivahue
Cen h noes i
 Title Date
Page No.

blioraphua
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FolloIng wth Linbs andSBurce hoatera was
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Complete his projtct
www. kpedia. Orq
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