Asked by
Yesenia Hernandez
on Dec 16, 2024
Verified
If the simple money multiplier is 5,the required reserve ratio must be equal to _____.
A) 5 percent
B) 0
C) 10 percent
D) 50 percent
E) 20 percent
Simple Money Multiplier
A formula used to determine the maximum amount of money that can be created by a bank's deposits under a fractional reserve banking system.
Required Reserve Ratio
The fraction of deposits that banks are legally mandated to keep as reserves and not lend out.
- Apprehend the rationale and numerical analysis of the money multiplier and its consequence on the money supply.
- Ascertain the purpose of the compulsory reserve ratio in banking operations and its consequence on the creation of currency.
Verified Answer
NA
Learning Objectives
- Apprehend the rationale and numerical analysis of the money multiplier and its consequence on the money supply.
- Ascertain the purpose of the compulsory reserve ratio in banking operations and its consequence on the creation of currency.