1. The M2 + Money Multiplier
Appendix 16
The M2 + Money Multiplier

2. M2 + = C + D + T +MMF
where C = currency
D = chequable deposits
T = all time and savings deposits
MMF = money market mutual funds

3. t = T / D time and savings deposit ratio
let
c = C / D currency ratio
t = T / D time and savings deposit ratio
f = MMF / D money market fund ratio

4. therefore
M2 + = (c x D) + D + (t x D) + (f x D)
= D (1 + c + d + f )
recall that equation #2 in the chapter
D = ( 1 / (c +r) ) x MB

5. M2 + = ( (1 + c + d + f )/ (c + rD) ) x MB
Therefore
M2 + = ( (1 + c + d + f )/ (c + rD) ) x MB
where rD is the reserve ratio on
(chequable) demand deposits