If total reserves for a bank are $25,000,excess reserves are $5,000,and demand deposits are $100,000,the money multiplier must be

Name: If total reserves for a bank are $25,000,excess reserves are $5,000,and demand deposits are $100,000,the money multiplier must be
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Quizplus · Accepted Answer

The reserve requirement can be calculated as total reserves minus excess reserves, which is $25,000 - $5,000 = $20,000. The reserve ratio is $20,000/$100,000 = 0.2. The money multiplier is the inverse of the reserve ratio, so 1/0.2 = 5.

If Total Reserves for a Bank Are $25,000,excess Reserves Are