Unit 4

• When a customer deposits cash or withdraws cash from their demand deposit account, it has no effect on the money supply.
  It only changes:
1. The composition of money
2. Excess Reserves
3. Required Reserves
• Single Bank
• Loan from your excess reserves
• Banking System
• ER x multiplier
  Total money supply
• FED
• When the FED buys or sells bonds, ER is created.