Suppose the currency drain ratio is 33.33 per cent and the desired reserve ratio is 10 per cent.The money multiplier equals
A)3.00.
B)4.27.
C)3.08.
D)2.50.
E)6.67.

Question

Quizplus · Accepted Answer

The formula for money multiplier is:
Money multiplier = 1 / (currency drain ratio + reserve ratio)
Substituting the given values, we get:
Money multiplier = 1 / (0.3333 + 0.10) = 1 / 0.4333 = 2.3077
Therefore, the closest option is C, which equals 3.08.

Suppose the Currency Drain Ratio Is 33