The Structure of Monetary Base and the Control of Money Supply

In the sense of C/D,cash holding ratio is actually decided by the central bank.It changes according to the monetary base.So this rate influences neither money multiplier nor the money supply.While in the sense of C 1/D,cash holding ratio is determined by the public.When the monetary base undulates, it keeps steady.Then it is involved in the determination of money supply as an element which influences the money multiplier,and at the same time,makes the money multipliers of the two parts of monetary base——cash circulation and bank reserves——change accordingly.Therefore,the structure of monetary base influences the money supply as well.