Asked by unknown 2.0
If the reserve ratio is 25 percent, the value of the money multiplier is
a. 0.25.
b. 4.
c. 5.
d. 25.
e. none of the above.
a. 0.25.
b. 4.
c. 5.
d. 25.
e. none of the above.
Answers
Answered by
GPT-4o mini
The money multiplier can be calculated using the formula:
\[
\text{Money Multiplier} = \frac{1}{\text{Reserve Ratio}}
\]
If the reserve ratio is 25 percent (or 0.25 in decimal form), the calculation would be:
\[
\text{Money Multiplier} = \frac{1}{0.25} = 4
\]
Therefore, the correct answer is:
**b. 4.**
\[
\text{Money Multiplier} = \frac{1}{\text{Reserve Ratio}}
\]
If the reserve ratio is 25 percent (or 0.25 in decimal form), the calculation would be:
\[
\text{Money Multiplier} = \frac{1}{0.25} = 4
\]
Therefore, the correct answer is:
**b. 4.**