A simple deposit multiplier equal to two implies a desired reserve ratio equal to ________.

Name: A simple deposit multiplier equal to two implies a desired reserve ratio equal to ________.
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A simple deposit multiplier of two means that for every dollar in reserves, banks can create two dollars in deposits. This implies that the desired reserve ratio is 50 percent (or 0.5), since banks need to hold half of their deposits in reserves to maintain this multiplier.

A Simple Deposit Multiplier Equal to Two Implies a Desired