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.

Question

Business

Juliana Harris

5 August, 06:18

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.

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Answers (1)

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Jaelynn Booker · Answer 1

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.