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Chapter 16: Determinants of the Money...
Synopsis
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This chapter incorporates depositor and bank behavior into the monetary process, presenting a more realistic model of the money supply process. The analysis is separated into three steps. First, because the Fed's control of the monetary base is more precise than its control over reserves, the model links changes in the money supply to changes in the monetary base. Next, the money multiplier, a ratio that relates the change in the money supply to a given change in the monetary base, is derived. Third, factors determining the money multiplier are examined.
For a more detailed chapter review with additional exercises and self-tests, order the Student Study Guide, ISBN 0-321-19416-0.
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