Question

If the required reserve ratio is 10 percent, what is the simple deposit multiplier? a. 20 b. 100 c. 5 d. 10

Answer 1

D.) 10

Step-by-step explanation:

Given the question:

Required reserve ratio equals 10 percent, Calculate the simple deposit multiplier?

Given that :

Reserve ratio (RR) = 10% = 0.1

The simple deposit multiplier is the reciprocal of the required reserve ; mathematically expressed as :

Simple deposit multiplier = 1 / RR

Simple deposit multiplier = 1 / 0.1

Hence simple deposit multiplier = 10