Question

How do economists and bankers determine how much the money supply will increase with each deposit?

a. revenue receipts
b. the money multiplier formula
c. calculating interest payments
d. prime rate divided by interest rate

Answer 1

B. The money multiplier formula

the money multiplier formula is the increase in the money supply equals the initial cash deposit times one divided by the required reserve ratio.

Answer 2

Economists and bankers determine how much the money supply will increase with each deposit by means of calculating the interest payments. The correct answer to this question is letter "C. Calculating interest payments". I hope this helps.