FINAL NOTES FOR UNIT 4

When a customer deposits cash or withdraws cash from their demand deposits acct, it has not effect on money supply

Single bank
- loan money Excess Reserves (ER)

Banking system
- ER X multiplier(total money supply)

It only changes:

1) the money composition of the money

2) excess reserves

3) required reserves

When the fed buys or sells bonds ER is created