If the reserve requirement is 20%, but the banks hold an additional 10% of deposits as excess reserves, what is the leakage-adjusted money multiplier?
A) 2.5
B) 3.3
C) 5
D) 10

Name: If the reserve requirement is 20%, but the banks hold an additional 10% of deposits as excess reserves, what is the leakage-adjusted money multiplier? A) 2.5 B) 3.3 C) 5 D) 10
Brand: Quizplus
Rating: 4.9 (39 reviews)

Question

Quizplus · Accepted Answer

The leakage-adjusted money multiplier is calculated as 1 / (reserve requirement + excess reserves). Here, it is 1 / (0.20 + 0.10) = 1 / 0.30 = 3.33.

If the Reserve Requirement Is 20%, but the Banks Hold