If the required reserve ratio is 10%, what will the money multiplier be? If you deposit...
If the required reserve ratio is 10%, what will the money multiplier be?
If you deposit $1,000 into a bank, how much will the maximum amount of checkable deposits that can be created as a result of that initial deposit?
Homework Answers
Money multiplier (mm)=1/reserve ratio
Given
Reserve ratio =10%=0.10
Money multiplier=1/0.10=10
Maximum checkable deposit =multiplier×initial deposit
=10×$1000=$10000
Therefore maximum checkable deposit=$10,000
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