money multiplier

Money multiplier

Under the fractional reserve banking system, a unit of cash injected into the system by a central bank increases as it propagates through the banking system. Thus an increase in the monetary base has a magnified effect on the money supply and the multiplicative effect is represented by the money multiplier.

money multiplier

see BANK DEPOSIT CREATION.
References in periodicals archive ?
The Blue Eye beat a highly-rated international competition, including Andreas Wohler's Noor Al Hawa, Chad Brown's American raider Money Multiplier and Qatar Derby-winning Italian contender Mac Mahon, to snap up his second Emir's Trophy victory in three years.
Fort Moville (Faleh Bughanaim) and Money Multiplier (Frankie Dettori) paced up the race.
Frankie Dettori, who rides the Chad Brown-trained Money Multiplier, will break from stall 11.
A lucky Laois lady pocketed [euro]40,000 after she bought a winning [euro]10 Money Multiplier 40 X scratch card at Browns Grocers in Portlaoise.
It makes nonsense of the money multiplier and the Monetary Policy Rate (MPR), instruments for managing money in circulation, volume of credit and inflation.
Assume India needs about Rs 10 lakh crore of currency in circulation, using a money multiplier effect of 4X.
Taking on debt, which results in less disposable income and less spending, means that the economy's money multiplier - the rate at which it changes hands - will not go high enough for the economy to heat up inflation.
In the macro-economic model a money multiplier exists which increases the value of each extra pound placed in the pocket of the consumer, dependant on their marginal propensity to consume.
The M1 money multiplier has also declined, as less of the money supply is lent out by banks, according to Kotlikoff.
By implication, the legacy of quantitative easing would only turn out to be high inflation in the future if two conditions were to materialise: first, a breakdown in the Fed's control that permitted a rapid resurgence of the money multiplier and money available to the public; and second, a reversal of the pattern of the past three decades to an earlier pattern in which rapid growth in the money supply was associated with high inflation.
In a March 2 research note, Citigroup economist Jun Trinidad said higher bank reserves might have caused the recent decline in the money multiplier due to higher reserves to deposits ratio, in turn implying less credit supply.
Finally, and perhaps most importantly, the banker provides a point of continuity if the instructor wishes to follow-up this fiscal multiplier exercise with the money multiplier exercise.