Why Would It Be Correct to Say That, If We $\Delta D=\frac{1}{r_{D}} \Delta R R$

question 47

Essay

Why would it be correct to say that, if we assume that people do not change their currency holdings and that banks do not hold any excess reserves, the equation $\Delta D=\frac{1}{r_{D}} \Delta R R$ really could be stated as $\Delta M 1=\frac{1}{r_{D}} \Delta R R$ ?

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Definitions:

Private Consumption

Expenditures by individual households or residents of a country on goods and services, not including purchases for business or investment purposes.

Gross Investment

The total amount of money spent on capital projects before deducting depreciation or other allowances for the wearing out of assets.

Government Spending

The total amount of money spent by the government on various sectors including public services, welfare, defense, and infrastructure.

Industry Regulation

The imposition of rules by a government, along with mechanisms for their enforcement, designed to modify behaviors within specific industries.