If required reserves are 10% and the monetary base is $1 billion, then the money supply will be $5 billion.

Name: If required reserves are 10% and the monetary base is $1 billion, then the money supply will be $5 billion.
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Quizplus · Accepted Answer

The money supply is determined by the money multiplier, which is 1 divided by the reserve ratio. With a 10% reserve ratio, the multiplier is 10, so the money supply would be $10 billion, not $5 billion.

If Required Reserves Are 10% and the Monetary Base Is