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Flashcards in Supply Of Money Deck (11):
1

Monetary base

Notes and coins outside the central bank

2

Broad money

Cash in circulation plus retail and wholesale bank and building society deposits

Severities with a maturity of less than five years

Held by the non bank private sector

Certificates of deposit

U.K. (M4)

3

Credit creation

The ability of a commercial bank to increase the amount of money in circulation by giving out more loans

The unique power of banks to multiply loans,deposits and advances

4

Narrow money

Notes and coins plus central bank reserves (M0)


Short term deposits In Banking system in circulation


More liquid

5

MZM

Notes and coin plus all aight deposits held by the non bank private sector

6

M2

Notes and coins plus all retail deposits (including all retail time deposits) held by the non bank private sector

7

Non bank private sector

Households and non bank firms


Everyone in the country but banks and the government (central and local )

8

Bank deposits multiplier

The no. Times greater the expansion of bank deposits than the additional liquidity in banks that it causes

E.g. 1:L

9

Money multiplier

The no. Times greater the expansion of money supply is than the expansion of the monetary base that caused it

Change in total broad money supply / change in monetary base

10

Public escort cash net requirement


PSNCR

The annual deficit of the public sector, and thus the amount that the public sector must borrow

11

Exogenous and endogenous money supply

Exogenous - money supply that does not downed on the demand for Money but is set by the authorities


Endogenous- money supply that is determined (at least in part) by the demand for money