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Assuming individuals hold no currency, calculate the simple money multiplier for each of the following reserve ratios:_____.
a. 5%
b. 10%
c. 20%
d. 50%
e. 75%

Respuesta :

Answer:

Considering that individual holds no currency, the money multiplier is the reciprocal of reserve requirement.

Therefore.

a. 5% reciprocal

1/0.05 = 20

b. 10% reciprocal

1/0.1 = 10

c. 20% reciprocal

1/0.2 = 5

d. 50% reciprocal

1/0.5 = 2

e. 75% reciprocal

1/0.75 = 1.3

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