If the reserve ratio is 15 percent, by how much will an additional $1000 of reserves increase the money supply?
A) $1176
B) $1275
C) $5667
D) $6667

Name: If the reserve ratio is 15 percent, by how much will an additional $1000 of reserves increase the money supply? A) $1176 B) $1275 C) $5667 D) $6667
Brand: Quizplus
Rating: 4.9 (43 reviews)

Question

Quizplus · Accepted Answer

The money multiplier is 1 divided by the reserve ratio, which is 1/0.15 = 6.67. Therefore, an additional $1000 of reserves will increase the money supply by $1000 * 6.67 = $6667.

If the Reserve Ratio Is 15 Percent, by How Much