Answer
Formula :
Money multiplier(m) = M/H
where M = Money supply = C + D where C = Currency, D = Deposit
H = Monetary Base = C + R where C = Currency, R = Desired reserves
=> Money multiplier(m) = M/H = (C + D)/C + R)
=> m = (C/D + 1)/(C/D + R/D)
where C/D = currency drain ratio = 0.2, R/D = Desired reserve ratio = 0.4
=> Money multiplier(m) = (C/D + 1)/(C/D + R/D) = (0.2 + 1)/(0.2 + 0.4) = 2
Hence, The money multiplier is 2.
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