San José State University Department of Economics 

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Definitions:
Derivation of m_{1}
The M2 money supply is defined as the M1 money supply
Let r_{T} be the required reserve ratio on time deposits. The required reserves at the Fed are then
The M2 money multiplier m_{2} is then given by:
m_{2} = (1 + C/D + T/D + MMF/D) 
(r_{D} + r_{T}(T/D) + ER/D + C/D) 
For a handy calculator for computing the money multipliers and the money supplies see money.
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