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Answer to Question #2970 in Macroeconomics for John
Question #2970
MT: initial base money printed by the Central Bank
MH: amount of cash in the hands of Households
MB: amount of cash in the vaults of Banks
MD: total deposits created by banks
r: deposit ratio
c: cash against deposit ratio
Using the definitions above, derive the total money supply (MS) formula based on the initial printing of money by the CB and the money multiplier by which the total money will change.
MH: amount of cash in the hands of Households
MB: amount of cash in the vaults of Banks
MD: total deposits created by banks
r: deposit ratio
c: cash against deposit ratio
Using the definitions above, derive the total money supply (MS) formula based on the initial printing of money by the CB and the money multiplier by which the total money will change.
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