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Practice mode Money, Interest Rates And Output

If banks keep a reserve ratio of 20 percent, what is the money multiplier?

Correct answer D. 5

Explanation

The simple money multiplier is 1 divided by the reserve ratio, and 1 divided by 0.2 equals 5.

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Question 04 Money, Interest Rates And Output

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Correct answer A. Commercial banks may borrow from and lend to each other, and the interest rate at which they do this is called the refinancing rate

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