If the required reserve ratio, m, is 20 percent, then the oversimplified money multiplier is
A)10
B)5
C)4
D)2

Name: If the required reserve ratio, m, is 20 percent, then the oversimplified money multiplier is A)10 B)5 C)4 D)2
Brand: Quizplus
Rating: 4.7 (35 reviews)

Question

Quizplus · Accepted Answer

The oversimplified money multiplier is calculated as 1 divided by the required reserve ratio (expressed as a decimal). Therefore, with a required reserve ratio of 20 percent (or 0.20), the money multiplier is 1 / 0.20 = 5.

If the Required Reserve Ratio, M, Is 20 Percent, Then