determines the amount of funds loaned by the Federal Reserve Bank to its members
is used by the Fed to determine the amount of currency in the economy
determines the amount of new money that will be created with each demand deposit
is used by the Board of Governors to decide interest rate cuts
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The money multiplier formula determines the amount of new money that will be created with each demand deposit.
The money multiplier reflects how an initial deposit can lead to a larger increase in the total money supply through the process of banks lending out a portion of deposits while keeping a fraction in reserve.
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