jake777 jake777

12-11-2020
Business

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Suppose that the required reserve ratio is 7.00%. What is the simple money (deposit) multiplier? Round to two
decimal places.

Respuesta :

MrRoyal MrRoyal

20-11-2020

Answer:

14.29

Explanation:

Given

Reserve Ratio (R) = 7.00%

Required

Calculate the deposit multiplier (M)

To calculate simple money multiplier (M), we make use of the following formula.

M = 1/R

Where

R represent the reserve ratio

Substitute 7.00% for R

M = 1/7.00%

Convert % to decimals

M = 1/0.07

M = 14.29 ---- Approximated

Hence, the simple money multiplier is 14.29

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