Refer to the information provided in Scenario 25.2 below to answer the question(s) that follow.
SCENARIO 25.2: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up.
-Refer to Scenario 25.2. What is the money multiplier in this economy?

Question

Refer to the information provided in Scenario 25.2 below to answer the question(s) that follow.
SCENARIO 25.2: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up. 
-Refer to Scenario 25.2. What is the money multiplier in this economy?

Quizplus · Accepted Answer

The money multiplier is calculated as the reciprocal of the reserve ratio. If the reserve ratio is 10%, the money multiplier is 1/0.10 = 10.

Refer to the Information Provided in Scenario 25