Table 29-5.
Bank of Kopeka

-Refer to Table 29-5.Assume there is a reserve requirement and the Bank of Kopeka is exactly in compliance with that requirement.Assume the same is true for all other banks.Lastly,assume people hold only deposits and no currency.What is the money multiplier?
A) 5
B) 10
C) 15
D) 20

Question

Table 29-5.
Bank of Kopeka
 
-Refer to Table 29-5.Assume there is a reserve requirement and the Bank of Kopeka is exactly in compliance with that requirement.Assume the same is true for all other banks.Lastly,assume people hold only deposits and no currency.What is the money multiplier?
A) 5 
B) 10 
C) 15 
D) 20

Quizplus · Accepted Answer

The money multiplier is calculated as 1/required reserve ratio. In this case, the required reserve ratio is 10%, so the money multiplier would be 1/0.10, which equals 10.

Table 29-5. Bank of Kopeka