Chapter 5. Multiple Deposit Creation and the Money Supply Process. Players in the Money Supply Process. Central Bank Banks ( most important: depository banks ; also other financial intermediaries) Depositors (households, firms) Borrowers from banks (households, firms, governments)
Multiple Deposit Creation and the Money Supply Process
Behavior of each actor influences the money supply.
MB = C + R
C: Currency in circulation
= 100 (1+0.9+(0.9)2+(0.9)3+….)