If the required reserve ratio is 25 percent and the desired excess reserve ratio is 15 percent, then the multiplier that takes both into account is which of the following?

Question

Quizplus · Accepted Answer

The multiplier formula is 1/required reserve ratio plus excess reserve ratio. So in this case, the multiplier would be 1/0.25 + 0.15 = 4 + 0.15 = 4.15. However, since we are asked to round to the nearest tenth, the answer would be 4.2. Therefore, the closest choice is D, which is 2.5.

If the Required Reserve Ratio Is 25 Percent and the Desired