Which of the following correctly is the money multiplier?
A) The required reserve ratio.
B) 1/(1 − the required reserve ratio).
C) 1/(required reserve ratio).
D) 1/(1 − MPC).

Name: Which of the following correctly is the money multiplier? A) The required reserve ratio. B) 1/(1 − the required reserve ratio). C) 1/(required reserve ratio). D) 1/(1 − MPC).
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Question

Quizplus · Accepted Answer

The money multiplier is calculated as the inverse of the required reserve ratio, which is 1/(required reserve ratio).

Which of the Following Correctly Is the Money Multiplier