Wikipedia Definition
In macroeconomics, a multiplier is a factor of proportionality that measures how much an endogenous variable changes in response to a change in some exogenous variable. In monetary economics, the money multiplier is the ratio of the money supply to the monetary base (i.e. central bank money). In some simplified expositions, the monetary multiplier is presented as simply the reciprocal of the reserve ratio, if any, required by the central bank. More generally, the multiplier will depend on the preferences of households, the legal regulation and the business policies of commercial banks – factors which the central bank can influence, but not control completely.
