Question

Please help clarify something. I have a formula for money supply that is MS = Cash...

Please help clarify something.

I have a formula for money supply that is
MS = Cash + Deposits

But I am also seeing a formula that is
MS = Change in MB X m.

Which one is it?
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Answer #1

The first formula is used to determine the monetary base in the economy. The second formula is used to determine the change in money supply due to the change in the monetary base and sometimes it is also used to determine the total money supply in the economy, here m refers to the money multiplier.

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