**Topic: Calculating the Money Multiplier**---**What is the value of the money multiplier when the required reserve ratio is:****Instructions:** Enter your responses rounded to two decimal places.(a) 16 percent?[Input Box](b) 12 percent?[Input Box]--- To find the value of the money multiplier, use the formula:\[ \text{Money Multiplier} = \frac{1}{\text{Required Reserve Ratio}} \]- For example, if the required reserve ratio is 16%, convert the percentage to a decimal (0.16) and calculate as follows:\[ \text{Money Multiplier} = \frac{1}{0.16} \]- Similarly, for a required reserve ratio of 12%:\[ \text{Money Multiplier} = \frac{1}{0.12} \]Make sure to round your answers to two decimal places.

Multiplier is the amount of the income that is generate from the extra income , The MPC is the proportion of money that will be spend when a person spend in economy , the formula is 1/ RRHigher the reserve ratio less the multiplier , because more reserve less consumption so multiplier will be less . here we calculate the value of the money multiplier with the given reserve ratio which are as follow- a) Given- reserve ratio = 16% or 0.16 Money Multiplier = 1/ reserve ratio Money Multiplier = 1/0.16 Money Multiplier = 6.25 Times so here we conclude that Money Multiplier is 6.25 Times b) Given - Reserve Ratio = 12% or 0.12 Money Multiplier = 1/ Reserve Ratio Money Multiplier = 1/0.12 Money Multiplier = 8.33 times so here we conclude money multiplier is 8.33 times

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Economics

What is the value of the money multiplier when the required reserve ratio is: Instructions: Enter your responses rounded to two decimal places. (a) 16 percent? (b) 12 percent?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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