Developing the Money Multiplier Formula (continued)

• Solving for M yields,

  • M=MB * ( ( 1+C/D) / (C/D + ER/D + rd ))
  • M = MB * m

    • m is the money multiplier

• One last step: MB = MBn + DL

  • M = (MBn + DL) * ( ( 1+C/D) / (C/D + ER/D + rd ) )

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