If the reserve requirement of a bank is 33%, then $100 of MO will lead to how much of M1?
1 answer:
If the reserve requirement of a bank is 33%, then $100 of MO will lead to $300 of M1. Thus, option (a) is correct.
What is bank?
The term bank refers to the financial institution offering the services related to the term money. The bank is manage financial system to handling accounts and manage the cash.
The bank is 33%
Money Multiplier=
Money Multiplier= 1/33%
Money Multiplier = 3.03
Money Multiplier = 3 (Approximately)
M1= Money Multiplier×M0
M1= 3×100
M1 = $300
$100 of M0 will lead to $300 of M1.
As a result, the MO of the bank can lead to the $300. Therefore, option (a) is correct.
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Your question is incomplete, but most probably the full question was
O $300
O $33
O $1000
O $330
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