Final answer:
The monetary multiplier when the reserve ratio is 30 percent is calculated using the formula 1 divided by the reserve ratio. This gives us a monetary multiplier of 3.33, which is option C.
Step-by-step explanation:
When the legal reserve ratio is 30 percent, we can calculate the monetary multiplier using the formula 1/reserve ratio. The reserve ratio is defined as the fraction of deposits a bank holds as reserves. It plays a crucial role in determining the extent to which the banking system can create money from a given amount of bank reserves.
Let's apply this formula to determine the monetary multiplier when the reserve ratio is 30 percent, which means 0.30 when expressed as a decimal:
Monetary Multiplier = 1 / Reserve Ratio
Monetary Multiplier = 1 / 0.30
Monetary Multiplier = 3.33
Therefore, with a reserve ratio of 30 percent, the monetary multiplier is 3.33 (option C).