Use the following to answer questions .
Exhibit: Reserves, Loans, and Money

-(Exhibit: Reserves, Loans, and Money) The required reserve ratio is 10%. What is the value of the deposit multiplier?
A) 1
B) 2.5
C) 7
D) 10

Question

Use the following to answer questions .
Exhibit: Reserves, Loans, and Money
 
-(Exhibit: Reserves, Loans, and Money) 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% (or 0.10), the deposit multiplier is 1/0.10, which equals 10.

Use the Following to Answer Questions