Classical or pure-portfolio models of this measure presume that the money supply is purely inelastic.
Classical or pure-portfolio models of this measure presume that the money supply is purely inelastic. The currency-deposit ratio and this value do not have a purely inverse relationship since members of the public would prefer to hold some of their deposits as cash. Criticisms about the efficacy of this measure include claims that commercial banks make loans independently of reserve positions, a position suggesting that reserve first models of this measure have no ex ante significance. In fractional reserve banking systems, this measure is always greater than one. This economic measure is equal to the reciprocal of the reserve ratio. FTP, name this measure which gives the theoretical maximum commercial banks could extend in the form of loans given a quantity of reserves set by a central bank.
Classical or pure-portfolio models of this measure presume that the money supply is purely inelastic.
money multiplier [prompt on partial answer]