Question

If the reuired reserve ratio is 15 percent, the simple deposit multiplier is

a. 15.0.
b. 1.5.
c. 6.67.
d. 3.33

Answer 1

The simple deposit multiplier formula is used to determine the total amount of money that can be created in an economy based on the reserve requirement. In this case, with a required reserve ratio of 15 percent, the simple deposit multiplier is approximately 6.67.

Step-by-step explanation:

The simple deposit multiplier is a formula used to determine the total amount of money that can be created in an economy based on the reserve requirement. The formula is calculated by dividing 1 by the reserve requirement. In this case, if the required reserve ratio is 15 percent, the simple deposit multiplier would be 1 divided by 0.15, which is equal to approximately 6.67.