The High-powered money expansion multiplier (Money Multiplier) is calculated as:

AReserve Requirement / Total Deposits

BVelocity × Price Level

C1 / Reserve Requirement Ratio (r)

D1 - Marginal Propensity to Consume

Explanation

The simple money multiplier equals 1 / r, where r is the required cash reserve ratio.

Submitted by: mcqstutor Team More Economics MCQs →