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13 November, 16:36

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

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  1. 13 November, 16:54
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    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
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