What is the money multiplier


Calculate the required numbers given the following information:

(1) If the reserve ratio requirement is 5%, what is the money multiplier? ______

(2) If the total deposits in the banking system are $250 million, what aggregate amount of dollars must be held by the Fed for all banks? __________

(3) What is the amount of excess reserves? _________

(4) What is the potential deposit creation into the banking system? _________

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Macroeconomics: What is the money multiplier
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