Economy, asked by bhumkarpranav3476, 1 year ago

If legal reserve ratio is 20%what will be the value of money multiplier

Answers

Answered by Arslankincsem

18

Money multiplier is the maximum amount the money supplied can be increased based on the increase in the reserves within the banking.

The total deposits the bank hold and is not allowed to lend are called reserves.

Money multiplier = 1/r , where r = reserve ratio

Money multiplier = 1/20 = 0.05

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