If the required reserve ratio is 20 percent and commercial bankers decide to hold additional excess reserves equal to 5 percent

Question

White raven [17]

3 years ago

10

If the required reserve ratio is 20 percent and commercial bankers decide to hold additional excess reserves equal to 5 percent

of any newly acquired checkable deposits, then the effective monetary multiplier for the banking system will be:

Business

1 answer:

Fofino [41] · Answer 1 · 2021-12-10T16:22:47+03:00

The effective monetary multiplier that will be used in the banking system given the data provided would be 4. A money multiplier is defined as the output of the reserve dollars the bank produces. To find the multiplier, just take into consideration the amount of deposit and the reserve ratio.