Question

What is the money multiplier when the reserve requirement is

Instructions: Round your responses to two decimal places.
a. 0.09?
b. 0.25?
C. 0.12?
833.33
d. 0.04?

Answer 1

Money multiplier= 1 / reserve requirement

a. Reserve requirement = 0.09

Money multiplier = 1 / 0.09

Money multiplier = 11.11

b. Reserve requirement = 0.25

Money multiplier = 1 / 0.25

Money multiplier = 4

c. Reserve requirement = 0.12

Money multiplier = 1 / 0.12

Money multiplier = 8.33

d. Reserve requirement = 0.04

Money multiplier = 1 / 0.04

Money multiplier = 25