unit 4: Final notes

March 29, 2016

Single bank
- loan money from excess reserves (ER)

Banking system
- ER x multiplier
*total money supply ER x multiplier x DD

IT ONLY CHANGES 

1. the composition of money 
2. excess reserves 
3. required reserves

*when a customer deposits cash or withdraws cash from their demand deposit act. It has NO effect on money supply.

FED- when the FED buys or sells bonds, ER is created