What ratios play an important role …
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Yogita Ingle 6 years, 5 months ago
Money Multiplier. Money multiplier (m) is the ratio of total money supply (M) to the stock of high powered money (H) in the economy. Symbolically:
m = M/H
where m represents money multiplier, M total money supply and H represents stock of high powered money. Clearly value of multiplier m is greater than 1 (M > 1) because increment in M exceeds H initially injected by RBI. Money supply in the economy is determined by the size of multiplier (m) and the amount of high powered money (H).
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