Final answer:
The money multiplier for the economy, given this bank's reserve ratio of 7.5%, is approximately 13.33.
Step-by-step explanation:
The student has provided information about a bank's liabilities and assets, including Deposits of $10,000 and Reserves of $750.
To calculate the money multiplier, we need to determine the reserve ratio. The reserve ratio is the fraction of deposits a bank holds as reserves. In this case, the reserve ratio is $750/$10,000, which equals 0.075 or 7.5%. To find the money multiplier, we use the formula 1 / reserve ratio.
Therefore, the value of the money multiplier for this economy is 1 / 0.075, which equals approximately 13.33.
The money multiplier is a concept used to understand how banks create money in the economy. It is defined as the quantity of money that the banking system can generate from each $1 of bank reserves.
The formula for calculating the money multiplier is 1 divided by the reserve ratio. In this case, the reserve ratio is not mentioned, so we cannot determine the value of the economy's money multiplier.