The money multiplier is given by:
ACRR
BCRR × total deposits
C1 − CRR
D1 / CRR
Answer & Solution
Correct answer: D. 1 / CRR
The money multiplier equals the reciprocal of the reserve ratio, 1/CRR; it shows how an initial deposit expands the money supply.
Related questions
The total stock of money in circulation among the public at a point of time is called:Acting as the 'lender of the last resort' to commercial banks is a function performed by tIn a barter economy, exchange requires that each party wants exactly what the other offersCommercial banks are able to create credit primarily on the basis of their:The currency held by the public plus the reserves of commercial banks together form the:Deposits that can be withdrawn on demand, such as in a current or savings account, are calThe rate at which the central bank lends short-term funds to commercial banks is the:The minimum percentage of deposits that commercial banks must keep with the central bank i