Question

Assume that the reserve-deposit ratio is 0.23, and the currency-deposit ratio is 0.21. What is the value of the money multiplier?

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Answer to a math question Assume that the reserve-deposit ratio is 0.23, and the currency-deposit ratio is 0.21. What is the value of the money multiplier?

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Gene
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60 Answers
The money multiplier is given by the formula:

m = \frac{1}{c + r}

where
- c is the currency-deposit ratio
- r is the reserve-deposit ratio

Given that the reserve-deposit ratio is 0.23 and the currency-deposit ratio is 0.21, we can substitute these values into the formula:

m = \frac{1}{0.21 + 0.23}

m = \frac{1}{0.44}

m = 2.27

\boxed{m = 2.27} is the value of the money multiplier.

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