A reserve requirement of 10 percent implies a potential money deposit expansion multiplier of
A)5.
B)10.
C)20.
D)100.

Name: A reserve requirement of 10 percent implies a potential money deposit expansion multiplier of A)5. B)10. C)20. D)100.
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Question

Quizplus · Accepted Answer

The money deposit expansion multiplier is calculated as the reciprocal of the reserve requirement ratio. With a reserve requirement of 10 percent (0.10), the multiplier is 1/0.10, which equals 10.

A Reserve Requirement of 10 Percent Implies a Potential Money