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welcome to lecture 6.2 in this lecture we will discuss what we mean by multiple deposit creation so lets get started all right so to give you a preview this lecture discusses the concept of multiple deposit creation and in the process we also discuss what we mean by the term money multiplier okay as far as the learning objectives are concerned uh in the previous lecture we learned how the central bank controls the monetary base by conducting open market purchases or open market sales correct in this lecture we will learn how a change in m naught or monetary base affects m1 or money supply and in the process we will also learn what we mean by the term money multiplier finally this lecture helps us understand the role commercial banks play in the money supply process okay now if you recall examples three and four from the previous lecture that discussed the impact of bank deposits and bank withdrawals on monetary base and money supply we assumed that commercial banks hold hundred perce