The monetary multiplier can be calculated using the formula:
\[ \text{Monetary Multiplier} = \frac{1}{\text{Reserve Requirement}} \]
In your case, if the reserve requirement is 20 percent (or 0.20 in decimal form), the calculation would be:
\[ \text{Monetary Multiplier} = \frac{1}{0.20} = 5 \]
Therefore, the monetary multiplier will be 5. This means that for every dollar held in reserve, the banking system can create up to five dollars in money supply.
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