Question

Suppose that the required reserve ratio is 9.00 %. What is the simple money (deposit) multiplier? Round to two decimal places. money multiplier:

Answer 1

Answer:

the simple money deposit or multiplier is 11.11

Explanation:

The computation of the simple money deposit or multiplier is as follows:

As we know that

Money Multiplier = 1 ÷ Reserve Ratio

Now if the required reserve ratio is 9%

So, the money multiplier is

= 1 ÷ 9%

= 1 ÷ 0.09

= 11.11

hence, the simple money deposit or multiplier is 11.11

We simply applied the above formula so that the correct value could come

And, the same is to be considered