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21 November, 03:23

Assuming individuals hold no currency, calculate the simple money multiplier for each of the following reserve ratios: a. 4 percentb. 12 percentc. 18 percentd. 26 percente. 30 percent:

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  1. 21 November, 06:39
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    a. 25 b. 7 c. 6 d. 4. e. 3

    Explanation:

    Money Multiplier = 1/Reserve ratio

    A. At 4% reserve ratio

    Money Multiplier = 1/0.04

    Money Multiplier = 25

    B. At 12% reserve ratio

    Money Multiplier = 1/0.12

    Money Multiplier = 6.67

    Money Multiplier = 7

    C. At 18% reserve ratio

    Money Multiplier = 1/0.18

    Money Multiplier = 5.56

    Money Multiplier = 6

    D. At 26% reserve ratio

    Money Multiplier = 1/0.26

    Money Multiplier = 3.85

    Money Multiplier = 4

    E. At 30% reserve ratio

    Money Multiplier = 1/0.3

    Money Multiplier = 3.33

    Money Multiplier = 3
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