Read the two statements and choose the correct option.
I. The money multiplier = total deposits created ÷ initial deposit.
II. The money multiplier = initial deposit ÷ total deposits created.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

The multiplier says how many times the first deposit total deposits become. I is true, II is its inverse and false.

Ten questions from Money Creation by Banks, at your own pace.

Ten questions from Money Creation by Banks, at your own pace.

Read the two statements and choose the correct option.I. The money multiplier = total deposits created ÷ initial deposit.II. The money multiplier = initial deposit ÷ total deposits created.