The purpose of this note is to provide an overview of the instruments of monetary policy and the main policy objectives. Mechanics for money multiplier explains algebraic output is provided. The note also provides examples of how the parameters related to the money multiplier effect on its value, including the tendency of the public to hold currency relative to demand deposits and the propensity of banks to hold reserves relative demand deposits. Companion exercises allows students to go through the mechanics of an expansionary monetary policy. "Hide
by Alan R Bekenstein, Melissa M. Appleyard, Petra Christmann Source: Darden School of Business 8 pages. Publication Date: August 23, 2002. Prod. #: UV0974-PDF-ENG
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