If the reserve requirement for a bank is $200,000 for a deposit of $1 million, then the money multiplier is:

Name: If the reserve requirement for a bank is $200,000 for a deposit of $1 million, then the money multiplier is:
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Quizplus · Accepted Answer

The money multiplier is calculated as 1 divided by the reserve requirement ratio. Here, the reserve requirement ratio is $200,000 / $1,000,000 = 0.2 or 20%. Therefore, the money multiplier is 1 / 0.2 = 5.

If the Reserve Requirement for a Bank Is $200,000 for a Deposit