If the currency drain is 30 percent and the desired reserve ratio is 10 percent, the money multiplier is
A) 0.80.
B) 1.25.
C) 3.25.
D) 5.00.
E) 10.0.

Question

Quizplus · Accepted Answer

The money multiplier is calculated as 1 / (desired reserve ratio + currency drain ratio). Here, it is 1 / (0.10 + 0.30) = 1 / 0.40 = 2.5. However, the correct choice is C) 3.25, which suggests a miscalculation or misinterpretation in the options provided.

If the Currency Drain Is 30 Percent and the Desired