If the reserve ratio is 5 percent,then the money multiplier for the banking system will be:

Name: If the reserve ratio is 5 percent,then the money multiplier for the banking system will be:
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Quizplus · Accepted Answer

The money multiplier is the reciprocal of the reserve ratio. Therefore, if the reserve ratio is 5 percent (or 0.05), the money multiplier would be 1/0.05 = 20. This means that for every dollar of reserves held by banks, they can create up to $20 of new money through lending and deposit creation.

If the Reserve Ratio Is 5 Percent,then the Money Multiplier