Question

Give relation between money multiplier and total credit creation.

Answer 1

Hyy Dude

Therefore, the amount of credit that a system of banking can create depends upon the reserve ratio. The banks can multiply a given amount of cash to many times of credit. ... We can, thus, think of a credit creation multiplier. The higher the reserve ratio, the smaller is the credit creation multiplier.

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Answer 2

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The amount of credit that a system of banking can create depends upon the reserve ratio. The banks can multiply a given amount of cash to many times of credit. ... We can, thus, think of a credit creation multiplier. The higher the reserve ratio, the smaller is the credit creation multiplier.

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