Money Multiplier

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A Money Multiplier is an economic multiplier that measures how money supply (endogenous variable) increases in response to a change of the monetary base (exogenous variable).



References

2016

The multiplier may vary across countries, and will also vary depending on what measures of money are considered. For example, consider M2 as a measure of the U.S. money supply, and M0 as a measure of the U.S. monetary base. If a $1 increase in M0 by the Federal Reserve causes M2 to increase by $10, then the money multiplier is 10