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COMMODITY MONEY: A medium of exchange (money) with both value in use and value in exchange. Commodity money is first and foremost a commodity that provides users with satisfaction of their wants and needs. However, it also has the secondary function of a medium of exchange.

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Lesson 19: Money Creation | Unit 4: The Multiplier Page: 16 of 23

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A multiplier captures the magnified relationship between an activity and the triggering event.The money creation process:
  • The activity is the deposit creation.
  • The trigger event is extra bank reserves.
The multiplier:
  • In our example, the banking system creates $1,000 of deposits from $100 worth of reserves.
  • The deposit multiplier equals 10: Each $1 of extra reserves triggers 10 times the amount in deposits.
D = mR

D = Number of deposits created.
R = Number of reserves added to the banking system.
m = The value of the multiplier (10 in the example).


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STABLE EQUILIBRIUM

Equilibrium that is restored if disrupted by an external force. Most economic models have equilibrium that is stable, reflecting the observation that the real world adapts to changes and maintains a fair degree of stability. The alternative to a stable equilibrium is an unstable equilibrium.

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APLS

BEIGE MUNDORTLE
[What's This?]

Today, you are likely to spend a great deal of time wandering around the downtown area hoping to buy either a turbo-powered vacuum cleaner or a battery-powered, rechargeable vacuum cleaner. Be on the lookout for the last item on a shelf.
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This isn't me! What am I?

The wealthy industrialist, Andrew Carnegie, was once removed from a London tram because he lacked the money needed for the fare.
"Good judgment comes from experience, and often experience comes from bad judgment."

-- Rita Mae Brown ‚ Writer

JEMS
Journal of Economics and Management Strategy
A PEDestrian's Guide
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