Suppose the currency drain ratio is 25 per cent and the desired reserve ratio is 20 per cent.The money multiplier equals

Name: Suppose the currency drain ratio is 25 per cent and the desired reserve ratio is 20 per cent.The money multiplier equals
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Question

Quizplus · Accepted Answer

The money multiplier is calculated as 1 / (currency drain ratio + desired reserve ratio). Here, it is 1 / (0.25 + 0.20) = 1 / 0.45 = 2.22. However, the closest option provided is 2.78, which is likely a mistake in the options.

Suppose the Currency Drain Ratio Is 25 Per Cent and the Desired