Question 58
HardOriginal questionWith a currency-deposit ratio of 0.5 and a reserve-deposit ratio of 0.25, the money multiplier (1 + cdr) ÷ (cdr + rdr) is
Show the answer and explanation
CorrectNot quiteAnswer B
Correct answer: B
Explanation
(1 + 0.5) ÷ (0.5 + 0.25) = 1.5 ÷ 0.75 = 2.
Worth noting
4 is 1 ÷ 0.25, which ignores the cash the public holds.
- Concept
- Multiplier with cdr and rdr
- Typical timeTypical
- 100 s
- Your timeYours
- —
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