If the public's currency ratio (cr) is 7.5% and the banks' desired reserve ratio (rr) is 2.5% an increase in high powered money (H) of $100 will result in:

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The money multiplier formula is 1 / (cr + rr), where cr is the currency ratio and rr is the reserve ratio. Here, it's 1 / (0.075 + 0.025) = 1 / 0.1 = 10. A $100 increase in high powered money results in a $1000 increase in deposits. The public's cash holdings increase by 7.5% of the increase in deposits, which is $75.

If the Public's Currency Ratio (Cr) Is 7