Recognizing the distinction between advances to banks and the nonborrowed monetary base, the money supply model is specified as ________.

Question

Quizplus · Accepted Answer

The correct formula for the money supply model, taking into account the distinction between advances to banks and the nonborrowed monetary base, is M = m × (MB_n + BR), where M is the money supply, m is the money multiplier, MB_n represents the nonborrowed monetary base, and BR stands for bank reserves. The "+" sign indicates that bank reserves (BR) are added to the nonborrowed monetary base to calculate the total monetary base before applying the multiplier.

Recognizing the Distinction Between Advances to Banks and the Nonborrowed