Econ310_Notes20101021 -...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 310- 004 Equations MB = C + R monetary base M = C + D M1 ΔD = (1/r) ΔR deposit multiplier R = RR + ER reserves M = mMB money multiplier c = C/D currency ratio e = ER/D excess reserves ratio D = (1/(r+e+c))MB deposits vs. monetary base m = (1 + c)/(r + e + c) money multiplier M = ((1 + c)/(r + e + c))MB money multiplier Variable definitions  money supply MB   monetary base  demand deposits in banking system  currency in circulation  reserves in banking system RR   required reserves in banking system ER   excess reserves in banking system deposit multiplier   1/r  money multiplier  required reserve ratio  ratio of currency to deposits  ratio of excess reserves to deposits Definitions required reserve ratio  – required percentage of liabilities banks must keep as reserves
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 4

Econ310_Notes20101021 -...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online