2 A model of the money supply exogenous variables the monetary base,B C+R controlled by the central bank the reserve-deposit ratio,rr=RD depends on regulations bank policies the currency-deposit ratio,cr=CD depends on households'preferences CHAPTER 18 Money Supply and Money Demand slide 13CHAPTER 18 Money Supply and Money Demand slide 13 A model of the money supply ▪ the monetary base, B = C + R controlled by the central bank ▪ the reserve-deposit ratio, rr = R/D depends on regulations & bank policies ▪ the currency-deposit ratio, cr = C/D depends on households’ preferences exogenous variables 2