Table 9-5
Bolton Bank: Partial Balance Sheet
(All figures in $ million)

-Refer to Table 9-5. The required reserve ratio is 10%. What is the value of the deposit multiplier?
A) 1
B) 2.5
C) 7
D) 10

Question

Table 9-5
Bolton Bank: Partial Balance Sheet
(All figures in $ million)
 
-Refer to Table 9-5. The required reserve ratio is 10%. What is the value of the deposit multiplier?
A) 1 
B) 2.5 
C) 7 
D) 10

Quizplus · Accepted Answer

The deposit multiplier is the inverse of the required reserve ratio. With a reserve ratio of 10%, the deposit multiplier is 1/0.10, which equals 10.

Table 9-5 Bolton Bank: Partial Balance Sheet