If the banking system has a required reserve ratio of 40 percent, then the money multiplier is
A) 2.
B) 2.5.
C) 4.
D) 8.

Name: If the banking system has a required reserve ratio of 40 percent, then the money multiplier is A) 2. B) 2.5. C) 4. D) 8.
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Quizplus · Accepted Answer

The money multiplier is calculated as 1 divided by the required reserve ratio. Therefore, with a 40 percent (or 0.4) reserve ratio, the money multiplier is 1 / 0.4 = 2.5.

If the Banking System Has a Required Reserve Ratio of 40