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After calculating money supply, currency to deposits ratio has been calculated
which is equal to currency in circulation/demand deposits
(it means how much % of demand deposits is held by public as currency)
then excess reserves ratio has been calculated which is equal to excess reserves/demand deposits
(it means how much % of demand deposits with bank is held as excess reserves by bank, it depends upon banks how much they want to keep)
then value has been put in formula for money multiplier.
which is (1 + c)/(1+ c + e)
it is important question newly added by ICAI, high chances to come in exam
Sir can you please explain the logic of this formula of multiplier