Intermediate Macroeconomics Lecture 19
Intermediate Macroeconomics Lecture 19
Money Supply 100%-reserve banking Fractional-reserve banking
Money Supply 100%-reserve banking Fractional-reserve banking
Money Supply A model of money supply The monetary base: C+R The reserve-deposit ratio: rr=R/D The currency-deposit ratio: cr= C/D Money supply: M=C+ D Monetary base: B=C+ R
Money Supply A model of money supply The monetary base: C+R The reserve-deposit ratio: rr = R/D The currency-deposit ratio: cr = C/D Money supply: M = C + D Monetary base: B = C + R
Money Supply M/B=(C+D)/(C+R) M/B=(cr+1)/(cr rr) M=[(cr+1)/(cr rr]B M=m*B m the money multiplier
Money Supply M/B = (C+D) / (C+R) M/B = (cr+1) / (cr + rr) M = [(cr+1) / (cr + rr)]*B M = m * B m: the money multiplier
Money Supply Money supply depends on ① Monetary base(B):+ 2 Reserve-deposit ratio(rr) 3 Currency-deposit ratio(cr)
Money Supply Money supply depends on ① Monetary base (B): + ② Reserve-deposit ratio (rr): - ③ Currency-deposit ratio (cr): -