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Leno4ka [110]
3 years ago
13

When the required reserve ratio is 20 percent, the money multiplier is?

Business
1 answer:
blsea [12.9K]3 years ago
7 0
Formula for money multiplier is :
money \: multiplier \: = 1 \div reserve \: ratio
thus
reserve ratio= 20% = 0.20
money multiplier = 1÷0.20= 5

Money multiplier shows the extent to which the money supply is affected by any change in the deposit amount.
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