Question

Assuming there are no leakages out of the banking system, a money multiplier equal to 5 means that: ANSWER Unselected each additional dollar of reserves creates $5 of deposits. Unselected each additional dollar of deposits creates $5 of reserves. Unselected an additional $5 of reserves creates one dollar of deposits. Unselected I DON'T KNOW YET

Answer 1

each additional dollar of reserves creates $5 of deposits.

Step-by-step explanation:

Money multiplier = amount deposited / reserve requirement

Increase in the total value of checkable deposit is determined by the money multiplier