Question

The simple deposit multiplier equals A. the ratio of the amount of deposits created by banks to the amount of new reserves. B. the​ inverse, or​ reciprocal, of the required reserve ratio. C. the formula used to calculate the total increase in checking account deposits from an increase in bank reserves. D. All of the above.

Answer 1

Answer:

All of the above

Explanation:

A simple deposit multiplier is the quantity of cash kept in reserve by a bank. It is said to be percentage of the amount in deposit at the bank. If the bank has a deposit multiplier of 20%, it then means that the bank must be able to keep $100 in reserve for every $500 they have in their deposits. Then investors can access the remaining $400 available as bank loans.