Aparna Lucknow, India 601 Questions 0 Answers 0 Best Answers 678 Points View Profile Aparna Asked: September 30, 20212021-09-30T16:42:55+05:30 2021-09-30T16:42:55+05:30In: Economics What is Broad Money to Reserve Money? What is Broad Money to Reserve Money? key economy terms Share Facebook 1 Answer Recent 0 Questions 518 Answers 176 Best Answers 0 Points View Profile Best Answer [Deleted User] 2021-09-30T16:44:27+05:30Added an answer on September 30, 2021 at 4:44 pm Broad Money to Reserve Money It is a measure of money multiplier. Money multiplier shows the mechanism by which reserve money creates money supply in the economy. It is again dependent on two variables, namely currency deposit ratio and reserve deposit ratio. M3 is a measure of broad money and includes currency with the public and deposits. The Reserve Money factor shows the reserve money and includes required reserve and the excess reserves of the banking system. If the reserve requirement as stipulated by the RBI increases, the Reserve Money value will increase and the multiplier will fall. Similarly, if banks keep more money as excess reserves, it will have an adverse effect on the money multiplier. 1 Reply Share Share Share on Facebook Share on Twitter Share on WhatsApp Leave an answerCancel replyYou must login or register to add a new answer. Related Questions What is Spot Price? What is Sovereign Risk?
Broad Money to Reserve Money