Answer to Question #222257 in Economics of Enterprise for fadfa

Economics of Enterprise

Question #222257

If the required reserve ratio (RR) for a bank is 0.81

, and banks lend out all excess reserves, what is the money multiplier (MM)? Round to one decimal place.

Expert's answer

Money multiplier"=\\frac1{reserve ratio}"

"=\\frac1{0.81}" "=1.235" "=1.2"

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