Answer the indicated question on the basis of the information in Table 14.2.Each question is based on the original balance sheet.

-Based on the information in Table 14.2,the money multiplier is equal to:
A) 10.0.
B) 6.7.
C) 5.0.
D) 3.3.

Question

Answer the indicated question on the basis of the information in Table 14.2.Each question is based on the original balance sheet.
 
-Based on the information in Table 14.2,the money multiplier is equal to:
A) 10.0. 
B) 6.7. 
C) 5.0. 
D) 3.3.

Quizplus · Accepted Answer

The money multiplier is calculated as the reciprocal of the reserve ratio. If the reserve ratio is 15% (0.15), the money multiplier is 1 / 0.15 = 6.7.

Answer the Indicated Question on the Basis of the Information