The required reserve ratio is 10 percent, but banks actually keep 20 percent on reserve.The actual money multiplier will be

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The required reserve ratio is 10 percent, which means that banks are required to keep 10 percent of deposits on reserve and can lend out the remaining 90 percent. However, if banks are keeping 20 percent on reserve, they are effectively only lending out 80 percent of deposits. The money multiplier is calculated as 1/required reserve ratio, so in this case, it would be 1/0.1, or 10. However, because banks are keeping 20 percent on reserve instead of 10 percent, the actual money multiplier is reduced to 1/0.2, or 5.

The Required Reserve Ratio Is 10 Percent, but Banks Actually