Monetary Base / High Powered Money: The sum of the currency held by the nonbank public (including companies) and the reserves held by depository institutions in the form of vault cash, or funds deposited by the institutions at the Federal Reserve. The money supply is related to the base as follows: M=kB, where k = based multiplier (a number such as 2.4) and B = monetary base (a number such as $300 million). The monetary base “M” is equal to the sum of currency held by the public “C” and the total reserves “RT” of the banking system. Money Multiplier: The most common mechanism used to measure this increase in the money supply is typically called the money multiplier . It calculates the maximum amount of money that an initial deposit can be expanded to with a given reserve ratio. Formula The money multiplier, m , is the inverse of the reserve requirement, R  : Example For example, with the reserve ratio of 20 percent, this reserve ratio, R , can also be expressed as a fraction: So then the money multiplier, m , will be calculated as: This number is multiplied by the initial deposit to show the maximum amount of money it can be expanded to Multipliers: In economics, the multiplier effect refers to the idea that the initial amount of money spent by the government leads to an even greater increase in national income . In other words, an initial change in aggregate demand causes a change in aggregate output for the economy that is a multiple of the initial change. The multiplier effect is a tool used by governments to estimate aggregate demand. This can be done in a period of recession or economic uncertainty. The money invested by a government creates more jobs, which in turn will mean more spending and so on. It must be noted that the extent of the multiplier effect is dependent upon the marginal propensity to consume and marginal propensity to import . Also that the multiplier can work in reverse as well, so an initial fall in spending can trigger further falls in aggregate output. The basic formula for the economic multiplier, in macroeconomics, is , or the change in equilibrium GDP divided by the change in investment (i.e. the initial increase in spending).  It is particularly associated with Keynesian economics ; some other schools of economic thought reject, or downplay the importance of multiplier effects, particularly in the long run. The multiplier has been used as an argument for government spending or taxation relief to stimulate aggregate demand. Shifts in Money Supply: Since the supply of money equals base multiplier (k) x Monetary Base (B), the money supply curve will increase if either the base or the base multiplier increases. Increases in the monetary base result from increases in the positive factors or decreases in the negative factors in the Supply of Base equations. How to calculate present value and future value
Future Value = Present Value (PV) + Interest (I) or Future Value (FV) = Present Value (PV) x Interest. Future Value in
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