If the reserve requirement is 1.25%, the potential money multiplier is
A) 0.0125.
B) 1.25.
C) 80.
D) 125.

Name: If the reserve requirement is 1.25%, the potential money multiplier is A) 0.0125. B) 1.25. C) 80. D) 125.
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Question

Quizplus · Accepted Answer

The potential money multiplier is calculated as the reciprocal of the reserve requirement ratio. Therefore, with a reserve requirement of 1.25%, or 0.0125 in decimal form, the potential money multiplier is 1 / 0.0125 = 80.

If the Reserve Requirement Is 1