bethany4897 bethany4897

15-12-2022
Business

Answered

look at the data. if the bank of springfield is holding on to no excess reserves, and all other banks have the same reserve ratio, then what is the value of the money multiplier?

Answer :

Tutorconsortium704 Tutorconsortium704

19-12-2022

the value of the Multiplier is 12.5

What is reserve ratio?

According to the instructions of the central bank, the reserve ratio is the portion of deposits that commercial banks must retain in cash.

Reserve Ratio = Reserves / Deposits = 19,200 / 240,000

= 0.08

= 8%

Multiplier = 1 / Reserve Ratio

= 1 / 0.08

= 12.5

Therefore the value of the Multiplier is 12.5

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