If the money multiplier is approximated to be 2, then the reserve ratio must be:
A) 50 percent.
B) 5 percent.
C) 2 percent.
D) 20 percent.

Name: If the money multiplier is approximated to be 2, then the reserve ratio must be: A) 50 percent. B) 5 percent. C) 2 percent. D) 20 percent.
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Question

Quizplus · Accepted Answer

The money multiplier is the reciprocal of the reserve ratio. If the money multiplier is 2, then the reserve ratio must be 1/2, or 50%.

If the Money Multiplier Is Approximated to Be 2, Then