ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The deposit multiplier, also known as the deposit expansion multiplier, is the basic money supply creation process that is determined by the fractional reserve banking system.

Detailed explanation-2: -Money multiplier is also known as the monetary multiplier. It is the maximum limit to which money supply can be affected by bringing about changes in the amount of money deposits.

Detailed explanation-3: -The money multiplier formula is also known as the credit multiplier formula and sometimes it is often used as a deposit multiplier formula as well which provides the base to it.

Detailed explanation-4: -Understanding Deposit Multiplier Also known as the simple deposit multiplier or the deposit expansion multiplier, the deposit multiplier is essentially the amount of money kept in the reserve account of a bank (as a requirement) to allow for continued functionality.

Detailed explanation-5: -The deposit multiplier represents the maximum amount of money a bank can lend out for every dollar it holds in reserves. The deposit multiplier is usually expressed as a percentage of the total amount of money held in demand deposit accounts, such as checking and money market accounts.