Question

Suppose the Federal Reserve sets the reserve requirement at 14%, banks hold no excess reserves, and no additional currency is held. Instructions: In part a, round your answer to 1 decimal place. In parts b and c, enter your answers as a whole number. If you are entering a negative number include a minus sign. a. What is the money multiplier

Answer 1

7.1%

Step-by-step explanation:

Money multiplier measures the total increase in money multiplier

Money multiplier =1 / reserve requirement

1 / 14% = 7,1%