A monetary base and an economy’s money supply as a mathematical relationship. It explains increased cash amounts in circulation caused by the banks’ use of their depositors’ funds to lend money. A bank loan generates money – the loan becomes a new deposit as cash the borrower can withdraw. This money-generating power comes from the fractional reserve system. It requires banks to keep in hand only a portion of the depositors’ funds, 10 to 15 percent, typically 12 percent. The initial deposit is now a multiple because it is booked in the depositor account as well as booked as a loan it the borrower’s account. Available cash has been increased.
What is MONEY MULTIPLIER?
Featuring Black’s Law Dictionary
Nothing implied or stated on this page should be construed to be legal, tax, or professional advice. The Law Dictionary is not a law firm and this page should not be interpreted as creating an attorney-client or legal adviser relationship. For questions regarding your specific situation, please consult a qualified attorney.
- How Long is a Life Sentence?
- What is Entrapment?
- A Guide to the Types & Classes of Bankruptcy
- A Simple Guide to Medicare vs Medicaid
- What are the Miranda Rights?
- Property Management Law
- How Arbitration Works
- What is the Fourth Amendment?
- How To Start a Sole Proprietorship
- What Does Emancipation Mean?
- What Is A Police Welfare Check?
- Best Way to Find Someone in Jail for Free
- How to Transfer a Car Title When The Owner Is Deceased
- How To Find A Name & Address Using A License Plate Number
- What Can You Do At 18 Legally?
- Best Way to Write a Professional Letter to a Judge
- Why Do Policemen Touch Your Tail Light When They Pull You Over?
- How To Find An Inmate’s Release Date
- Signing a Letter on Someone Else’s Behalf
- How Do You Look up License Plate Numbers?