What is the correct formula for the money multiplier?
A)(Required reserve ratio)/(total variable cost)
B)[1 (required reserve ratio)]/(marginal cost)
C)[1-(MPC)]/required reserve ratio
D)1/(required reserve ratio)

Question

Quizplus · Accepted Answer

The correct formula for the money multiplier is simply 1 ÷ the required reserve ratio (shown above as 1/(required reserve ratio)).
Key Takeaway: The formula for the money multiplier is one of the most important ones to remember for your AP Macroeconomics test. Remember that it is simply 1/RRR, where RRR is the required reserve ratio.

What Is the Correct Formula for the Money Multiplier