The money multiplier can also be calculated as ________, where a is the currency drain ratio and b is the desired reserve ratio.
A)(a + b)÷ (1 + b)
B)a ÷ (a + b)
C)(1 + a)÷ (a + b)
D)(a + b)÷ (1 + a)
E)(1 + b)÷ (a + b)

Question

Quizplus · Accepted Answer

The money multiplier is calculated as (1 + a) / (a + b), where 'a' is the currency drain ratio and 'b' is the desired reserve ratio. This formula accounts for both the currency held by the public and the reserves held by banks.

The Money Multiplier Can Also Be Calculated as ________, Where