Question

The people in an economy have $25 million in money. There is only one bank where they deposit their money and it holds 10% of the deposits as reserves. What is the money multiplier in this economy?

A. 5 B. 1 C. 20 D. 10

Answer 1

Answer:

The people in an economy have $25 million in money. There is only one bank where they deposit their money and it holds 10% of the deposits as reserves. What is the money multiplier in this economy?

D. 10

Explanation:

10% of $25, 000, 000= $2,500,000

Money multiplier in this economy is by 10