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The money multiplier is normally presented in the context of some simple accounting identities: [1] [2] Usually, the money supply (M) is defined as consisting of two components: (physical) currency (C) and deposit accounts (D) held by the general public.
The multiplier may vary across countries, and will also vary depending on what measures of money are being considered. For example, consider M2 as a measure of the U.S. money supply, and M0 as a measure of the U.S. monetary base. If a $1 increase in M0 by the Federal Reserve causes M2 to increase by $10, then the money multiplier is 10.
The money multiplier, m, is the inverse of the reserve requirement, R: [26] m = 1 R . {\displaystyle m={\frac {1}{R}}.} In countries where the central bank does not impose a reserve requirement, such as the United States, Canada and the United Kingdom, the theoretical money multiplier is undefined, having a denominator of zero.
Under this view, the money multiplier compounds the effect of bank lending on the money supply. The multiplier effect on the money supply is governed by the following formulas: = : definitional relationship between monetary base MB (bank reserves plus currency held by the non-bank public) and the narrowly defined money supply, ,
In some economics textbooks, the supply-demand equilibrium in the markets for money and reserves is represented by a simple so-called money multiplier relationship between the monetary base of the central bank and the resulting money supply including commercial bank deposits. This is a short-hand simplification which disregards several other ...
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The multiplier number is pulled during or right before the lottery drawing. If you win a non-jackpot prize (and chose the multiplier add-on to your ticket) you will be able to use that number to ...