 We have almost completed our topic of money supply, but up till this point, we have studied that there is always a multiple deposit creation. That is if central bank increases reserve through open market operation, then money supply will be in multiple of that change in reserve. If 1 billion reserve increases, then money supply will increase more than 1 billion. Now, how much will happen depends on different factors. How many people hold currency, how many banks hold excess reserve, how much central bank has a required reserve ratio, it will depend on all of these factors. So, now we go to the concept of money multiplier. This is the concept of money multiplier, which you have learnt actually, that money multiplies. The money issue in the central bank monetary base, the deposit and currency that the public has, especially in deposit, the currency is just added, then it multiplies in the deposit form. When it multiplies, then the question will be how much it multiplies, the number which it multiplies will be called money multiplier. So, now we go to the money multiplier and we will derive the formula for this. And in derivation, some equations are used, but it is a simple equation, if you have understood it carefully. And that is that first, if we define money multiplier, then what will it become? How much the money supply changes for a given change in monetary base? That is the same thing, that the monetary base has changed, then how much the total money will change, from which ratio? That multiple is the money multiplier. This means that what multiple of the monetary base is transformed into money supply and for that, an equation is given, that M, which is money, when M is written as money, then this means that this money supply can be M1 or M2, we are not specifying that this is M1, that is M1 or M2, the concept is of money supply. So, this means that money supply is always equal to M multiplied by Mb. Mb is monetary base, which is basically central bank's money, it multiplies by M to get value of total money supply. So, the multiple we are talking about is M, we are multiplying it and this lecture is multiplied by this M. Now, if we want to derive its formula, then the way of derivation is that we substitute the equations that you have already read, first of all we say that we are discussing again and again how much the public holds the currency and how much the deposit holds. This means that the public has a decision regarding the currency to deposit ratio, we denote it with small c, in the same way there is a decision of the commercial bank that how much the excess reserve holds, we also take the excess reserve to deposit ratio and denote it with small or lower case letter e. On the other hand, we know that the total reserves are equal to the required reserves plus excess reserves, is that right? So, now the required reserves are equal to the required reserve ratio multiplied by d. So, this means that the total reserves will be equal to the required reserve ratio multiplied by d plus excess reserves. One thing is being clarified from here, that if you zero the excess reserves in the second-last equation, as we did in the previous case, in the example, but if we do zero the excess reserve here to explain it, and you know that rr is always less than 1 required reserve ratio, so this equation is telling that r is equal to fraction of deposit, this means that the deposits are always greater than reserve, this is clear. But we have come to a point where we have to reach the formula of money multiplier. Now, we will use the definition of monetary base. The definition of monetary base is total reserves plus currency. So, this means that the monetary base will have a required reserve ratio multiplied by deposit plus excess reserves plus currency. So, this means that the monetary base finally becomes required reserve ratio multiplied by deposit plus excess reserves to deposit ratio multiplied by deposit plus currency to deposit ratio multiplied by deposit. If you look at it, then we can take it as common in terms of rr. When we take it as common, then we will get the monetary base is equal to required reserve ratio plus excess reserve ratio plus currency to deposit ratio multiplied by deposit. Now, because we had said that the money multiplier is multiplied by the monetary base, then we have total money, so we take the deposit value from here so that the monetary base goes to the other side. So, from here we have the deposit value i, i is 1 over rr plus e plus c into the monetary base. But we did not have to reach the deposit, we had to reach the money. And the definition of money is currency plus deposit, so we derived the formula for deposits and if we add currency in it, then we will get total money supply. So, money is equal to deposit plus currency, we know the value of deposit, now we have derived the formula and we can say that the currency to deposit ratio multiplied by deposit is 1 plus c into d, so total money supply will be 1 plus c into d. Now, we have already derived the formula for d, we substitute it here, so we have the final money formula which is 1 plus t which is currency to deposit ratio t divided by required reserve ratio plus excess reserve to deposit ratio plus currency to deposit ratio multiplied by monetary base. Now, this m is the money supply, mb is the monetary base and this ratio is the money multiplier m. What is this? Money multiplier. So, what is the money multiplier function of the currency ratio, that is, the function of the money multiplier of the currency ratio and the currency ratio which is set is public. So, the function of the access reserve ratio, access reserve ratio, whose decision is of the commercial bank and then the money multiplier is dependent on R, R is the required reserve ratio, who sets this central bank. This means that the money multiplier in the money supply process is determined by the decision of the three players, central bank, commercial bank and general public. Thank you.