Michelle R. Garfinkel and Daniel L. Thornton show that the money multiplier is not independent of monetary policy actions as is commonly assumed. They note that, for the multiplier to be independent of policy actions, movements in the ratio of currency to checkable deposits (the most important determinant of the multiplier) must be due to individuals simply adjusting their holdings of currency and checkable deposits. Most of the movement in this ratio, however, is due to policy-induced changes in checkable deposits, say the authors; moreover, the influence of policy actions on the multiplier has become more important since the implementation of the Monetary Control Act of 1980. Since then, the relationship between checkable deposits and reserves has become particularly close.