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Why might the money supply not expand by the amount predicted by the deposit expansion multiplier?
Wiki User
∙ 11y ago
The reserve requirement could change.
Wiki User
∙ 11y ago
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What is the money multiplier formula?
The money multiplier formula is the amount of new money that will be created with each demand deposit, calculated as 1 ÷ RRR.
What is a period of time when the amount of business increases is called?
expansion
What is output multiplier in economics?
The expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold on reserves. In other words, it is money used to create more money and calculated by dividing total bank deposits by the reserve requirement. The multiplier effect depends on the set reserve requirement. So, to calculate the impact of the multiplier effect on the money supply, we start with the amount banks initially take in through deposits and divide by the reserve ratio. If, for example, the reserve requirement is 20%, for every $100 a customer deposits into a bank, $20 must be kept in reserve. However, the remaining $80 can be loaned out to other bank customers. This $80 is then deposited by these customers into another bank, which in turn must also keep 20%, or $16, in reserve but can lend out the remaining $64. This cycle continues - as more people deposit money and more banks continue lending it - until finally the $100 initially deposited creates a total of $500 ($100 / 0.2) in deposits. This creation of deposits is the multiplier effect. The higher the reserve requirement, the tighter the money supply, which results in a lower multiplier effect for every dollar deposited. The lower the reserve requirement, the larger the money supply, which means more money is being created for every dollar deposited. source:: http://financial-dictonary.thefreedictionary.com
What is the relationship between monetary base and the money multiplier?
The term monetary base is an economic term that can also be reserve money or base money. It is simply the amount of money in circulation. It is monitored by the central bank of government by buying and selling bonds. A money multiplier is the deposits that increase through the banksÕ loan revenue.
In economics what is a multiplier?
When used in economics, the term multiplier refers to a proportion factor that measures how much a variable happens to change in response to a change in another variable. The most common multipliers in economics are money multipliers and fiscal multipliers.
What is the money multiplier formula?
The money multiplier formula is the amount of new money that will be created with each demand deposit, calculated as 1 ÷ RRR.
The money multiplier formula _____.?
determines the amount of new money that will be created with each demand deposit
how much interest will you get at the end of the year if the interest is 2.05 pa?
Assuming it is 2.05 percentper annum, then 2.05% of the amount that you deposit (or 2.05% of the average amount of your deposit).Assuming it is 2.05 percentper annum, then 2.05% of the amount that you deposit (or 2.05% of the average amount of your deposit).Assuming it is 2.05 percentper annum, then 2.05% of the amount that you deposit (or 2.05% of the average amount of your deposit).Assuming it is 2.05 percentper annum, then 2.05% of the amount that you deposit (or 2.05% of the average amount of your deposit).
How do you a multiplier to calculate a percentage increase?
percent increase=(new amount-original amount) _____________________ original amount
What is a deposit that gives a certain amount of interest in a specified amount of time?
time deposit
What is the multiplier that will increase an amount by 15 percent?
N x 1.15
What is the Difference between fixed deposit and recurring deposit?
Hi, Fixed Deposit : Deposit certain amount for certain period of time either monthly/yearly and fetching of amount is optional. If you need to get the FD amount in 1 year (example), interest will be added with the actual amount . The interesting rate is depends on your bank. Recurring Deposit : Deposit fixed amount in regular time period. At final you will get the total amount with specific interest.
What amount you deposit into a saving account could be insured by the federal deposit insurance corporation up to what amount?
$250.00
What is loan against fixed deposit?
Fixed deposit is the case in which you deposit the amount for a particular time period. Now the loan which you get against your deposit is a specific amount of money which is differ according to bank policy.
What is the maximum amount of cash you can deposit in a bank?
Banks will accept any amount if you deposit it. However any cash deposit made over $10,000 will be reported to the IRS.
What is upredictable?
Something that is not predicted. Such as the amount of answers that you will get for this question
How are floods predicted?
Floods are predicted by analyzing the amount of ground saturation, river levels, and the amount of incoming rain. All these factors combined help determine if a flood will occur and how severe it will be.
