Table 29-4

-Refer to Table 29-4.Assume that the Bank of Tampa is holding the required percent of deposits as reserves.Also,assume all other banks hold only the required percent of deposits as reserves and that people hold only deposits and no currency.What is the money multiplier?
A)5
B)10
C)15
D)20

Question

Table 29-4
 
-Refer to Table 29-4.Assume that the Bank of Tampa is holding the required percent of deposits as reserves.Also,assume all other banks hold only the required percent of deposits as reserves and that people hold only deposits and no currency.What is the money multiplier?
A)5 
B)10 
C)15 
D)20

Quizplus · Accepted Answer

The money multiplier is calculated as 1/RR where RR is the required reserve ratio. In this case, assuming Bank of Tampa is holding the required reserves, the RR is 10%. Therefore, the money multiplier is 1/0.1 = 10.

Table 29-4 -Refer to Table 29-4.Assume That the Bank of Tampa Is