If the currency-depoist ratio equals 0.5 and the reserve-depoist ratio equals 0.1,then the money multiplier equals:

Question

If the currency-depoist ratio equals 0.5 and the reserve-depoist ratio equals 0.1,then the money multiplier equals:
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Solution 1

The money multiplier is calculated using the formula:

Money Multiplier = 1 + Currency-Deposit Ratio / Reserve-Deposit Ratio + Currency-Deposit Ratio

Substituting the given values into the formula:

Money Multiplier = 1 + 0.5 / 0.1 + 0.5 Money Multiplier = 1 + 5 Money Multiplier = 6

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Knowee AI StudyGPT is a powerful AI-powered study tool designed to help you to solve study problem.
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