If the required reserve ratio is a uniform 25 percent on all deposits, the money multiplier will be:
A) 4.00.
B) 2.50.
C) 0.40.
D) 0.25.

Name: If the required reserve ratio is a uniform 25 percent on all deposits, the money multiplier will be: A) 4.00. B) 2.50. C) 0.40. D) 0.25.
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Question

Quizplus · Accepted Answer

The money multiplier is calculated as 1 divided by the required reserve ratio. With a required reserve ratio of 25 percent (or 0.25), the money multiplier is 1 / 0.25 = 4.00.

If the Required Reserve Ratio Is a Uniform 25 Percent