Question

If the required reserve ratio is 15 percent, the simple deposit multiplier is:_____

Answer 1

Answer:

C. 6.67

Step-by-step explanation:

Given

Reserve Ratio (RR) = 15%

Required

Determine the simple deposit multiplier

Simple deposit multiplier (M) is calculated by taking the inverse of RR.

The following formula applies:

$M = \frac{1}{RR}$

Substitute 15% for RR

$M = \frac{1}{15\%}$

Convert 15% to decimal

$M = \frac{1}{0.15}$

$M=6.67$

Hence, option C answers the question