3/24 Money Creation Formula
- a single bank can create $ by loaning out its ER
- the banking system can $ by a multiple of the ER
- [Money Multiplier (1/Required Reserved Ratio)] MM * ER = Expansion of money
New vs. Existing Money
- if a deposit in a bank is existing $, part of M1, depositing the $ has no immediate change in MS as it was already counted in the MS
- Existing currency deposits into a checking acct changes only in composition of the MS from coins/paper $ to checking acct deposits
- Total change in the MS of deposited is the new money created by the banking sys.
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I think you could add more visuals to your blog but overal nice job of having the notes down. In addition I think you could have added practice problems or extra notes on how to differentiate between the various formulas like when to add in demand deposit.
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