A simple deposit multiplier equal to four implies a required reserve ratio equal to

Question

Quizplus · Accepted Answer

The required reserve ratio is the fraction of deposits that a bank is required to hold in reserves, and the simple deposit multiplier is the ratio of the amount of deposits to the amount of reserves. The formula for the simple deposit multiplier is 1/required reserve ratio. If the simple deposit multiplier is four, then the required reserve ratio is 1/4, which is equal to 25 percent. So, the correct answer is C)25 percent.

A Simple Deposit Multiplier Equal to Four Implies a Required