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Basic features

In a fiat money system, bank credit creation equals money creation, Δ B = Δ M. {\displaystyle \Delta B=\Delta M.} Therefore, it is also common to represent the loanable funds doctrine as P S + Δ M = P I. {\displaystyle PS+\Delta M=PI.} The preceding description holds for closed economies. In open economies, net capital outflows must be added to credit demand.