The currency drain ratio is 0.2 and the desired reserve ratio is 0.5. What is the...

The currency drain ratio is 0.2 and the desired reserve ratio is 0.5.

What is the money multiplier?

The money multiplier is __.

Solutions

Expert Solution

Ans) The money multiplier is 1.71

Money multiplier = =(1+CDR)/(DRR + CDR)

= ( 1 + 0.2) / ( 0.5 + 0.2)

= 1.2/ 0.7 = 1.71

Rahul Sunny answered 1 year ago

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