Final answer:
The resulting money multiplier when the Federal Reserve sets the reserve rate to 4% is 25.
Step-by-step explanation:
The money multiplier is calculated using the formula 1/reserve ratio, where the reserve ratio is the fraction of deposits that the bank wishes to hold as reserves. In this case, the reserve rate set by the Federal Reserve is 4%, which means the reserve ratio is 0.04. Therefore, the money multiplier would be 1 divided by 0.04, which is equal to 25.