Portfolio theories place emphasis on function of money as currencies. They coordinate demand for money to a ratio of the risk levels and the income connected with storage of means in the form of money or in the form of other assets.
M of dollars of a gain of the offer of money is the share of each dollar of a gain of monetary base. The monetary base possessing property of multiplicative impact on the offer of money is called often money of the increased force.
It is obvious that reduction of the offer of money it is impossible to charge to reduction of monetary base: she during this period grew up. The main reason - reduction of a money multiplier in connection with essential growth
Follows from the equation that the offer of money is function of three variables. Thus it is proportional to monetary base. Let's designate proportionality coefficient (cr + / (cr * rr) as m and we will call it a money multiplier:
There are many versions of theories of transactions, and each of them in own way represents processes of receiving money and transactions. Unites their uniform understanding of a lack of this type of assets giving low profit, and also its advantages as convenient means of transactions. Having weighed that and another, the person solves, how many cash it should have.
The size of the offer of money is defined by monetary base, norm of reservation of deposits and coefficient of deposition of money. Expansion of base causes the proportional growth of the offer of money. Decrease in norm of reservation of deposits and coefficient of deposition keeps to growth of a money multiplier and, therefore, offers of money.