Answer to Question #148668 in Macroeconomics for Han Midd

Question

If the currency deposit ratio is 0.18 and the reserve deposit ratio is 0.3, then the money multiplier tells us that a $50 deposit will cause the money supply to increase by approximately

Answer 1

Ratio of reserves and deposits $0.18/0.30= 3/5$

On depositing $50, the money supply will tend to increase by; $3/5$ $×$ $50 $= 30$