Economics · Money Multiplier Theory

In a simplified macroeconomic framework where time deposits are excluded from the money supply Definition, what is the formula for the money multiplier (m)? Let C r represent the currency-deposit ratio and r r represent the reserve-deposit ratio.

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1rr1 + Cr
2Crrr
31 + CrCr + rr✓
4Cr + rs1 + Cr

Correct answer

1 + CrCr + rr

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In a simplified macroeconomic framework where time deposits are excluded from the money supply Definition, what is the formula for the money multiplier (m)? Let C r represent the currency-deposit ratio and r r represent the reserve-deposit ratio.

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In a simplified macroeconomic framework where time deposits are excluded from the money supply Definition, what is the formula for the money multiplier (m)? Let C r represent the currency-deposit ratio and r r represent the reserve-deposit ratio.

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