A Bank has a Reserve Ratio of 10%
An initial deposit of 1,000.00
Calculate the money multiplier
Calculate Money Multiplier (m):
| m = | 1 |
| RR |
| m = | 1 |
| 0.1 |
m = 10
Display the table of reserves and loans:
| Bank | Deposit | Reserves | Loan Out |
|---|---|---|---|
| 1 | $1,000.00 | 1,000.00 x 10% = $100.00 | 1,000.00 - 100.00 = $900.00 |
| 2 | $900.00 | 900.00 x 10% = $90.00 | 900.00 - 90.00 = $810.00 |
| 3 | $810.00 | 810.00 x 10% = $81.00 | 810.00 - 81.00 = $729.00 |
| 4 | $729.00 | 729.00 x 10% = $72.90 | 729.00 - 72.90 = $656.10 |
| 5 | $656.10 | 656.10 x 10% = $65.61 | 656.10 - 65.61 = $590.49 |
| 6 | $590.49 | 590.49 x 10% = $59.05 | 590.49 - 59.05 = $531.44 |
| 7 | $531.44 | 531.44 x 10% = $53.14 | 531.44 - 53.14 = $478.30 |
| 8 | $478.30 | 478.30 x 10% = $47.83 | 478.30 - 47.83 = $430.47 |
| 9 | $430.47 | 430.47 x 10% = $43.05 | 430.47 - 43.05 = $387.42 |
| 10 | $387.42 | 387.42 x 10% = $38.74 | 387.42 - 38.74 = $348.68 |
| 11 | $348.68 | 348.68 x 10% = $34.87 | 348.68 - 34.87 = $313.81 |
| 12 | $313.81 | 313.81 x 10% = $31.38 | 313.81 - 31.38 = $282.43 |
| 13 | $282.43 | 282.43 x 10% = $28.24 | 282.43 - 28.24 = $254.19 |
| 14 | $254.19 | 254.19 x 10% = $25.42 | 254.19 - 25.42 = $228.77 |
| 15 | $228.77 | 228.77 x 10% = $22.88 | 228.77 - 22.88 = $205.89 |
| 16 | $205.89 | 205.89 x 10% = $20.59 | 205.89 - 20.59 = $185.30 |
| 17 | $185.30 | 185.30 x 10% = $18.53 | 185.30 - 18.53 = $166.77 |
| 18 | $166.77 | 166.77 x 10% = $16.68 | 166.77 - 16.68 = $150.09 |
| 19 | $150.09 | 150.09 x 10% = $15.01 | 150.09 - 15.01 = $135.08 |
| 20 | $135.08 | 135.08 x 10% = $13.51 | 135.08 - 13.51 = $121.57 |
| 21 | $121.57 | 121.57 x 10% = $12.16 | 121.57 - 12.16 = $109.41 |
| 22 | $109.41 | 109.41 x 10% = $10.94 | 109.41 - 10.94 = $98.47 |
| 23 | $98.47 | 98.47 x 10% = $9.85 | 98.47 - 9.85 = $88.62 |
| 24 | $88.62 | 88.62 x 10% = $8.86 | 88.62 - 8.86 = $79.76 |
| 25 | $79.76 | 79.76 x 10% = $7.98 | 79.76 - 7.98 = $71.78 |
| 26 | $71.78 | 71.78 x 10% = $7.18 | 71.78 - 7.18 = $64.60 |
| 27 | $64.60 | 64.60 x 10% = $6.46 | 64.60 - 6.46 = $58.14 |
| 28 | $58.14 | 58.14 x 10% = $5.81 | 58.14 - 5.81 = $52.33 |
| 29 | $52.33 | 52.33 x 10% = $5.23 | 52.33 - 5.23 = $47.10 |
| 30 | $47.10 | 47.10 x 10% = $4.71 | 47.10 - 4.71 = $42.39 |
| 31 | $42.39 | 42.39 x 10% = $4.24 | 42.39 - 4.24 = $38.15 |
| 32 | $38.15 | 38.15 x 10% = $3.82 | 38.15 - 3.82 = $34.33 |
| 33 | $34.33 | 34.33 x 10% = $3.43 | 34.33 - 3.43 = $30.90 |
| 34 | $30.90 | 30.90 x 10% = $3.09 | 30.90 - 3.09 = $27.81 |
| 35 | $27.81 | 27.81 x 10% = $2.78 | 27.81 - 2.78 = $25.03 |
| 36 | $25.03 | 25.03 x 10% = $2.50 | 25.03 - 2.50 = $22.53 |
| 37 | $22.53 | 22.53 x 10% = $2.25 | 22.53 - 2.25 = $20.28 |
| 38 | $20.28 | 20.28 x 10% = $2.03 | 20.28 - 2.03 = $18.25 |
| 39 | $18.25 | 18.25 x 10% = $1.83 | 18.25 - 1.83 = $16.42 |
| 40 | $16.42 | 16.42 x 10% = $1.64 | 16.42 - 1.64 = $14.78 |
| 41 | $14.78 | 14.78 x 10% = $1.48 | 14.78 - 1.48 = $13.30 |
| 42 | $13.30 | 13.30 x 10% = $1.33 | 13.30 - 1.33 = $11.97 |
| 43 | $11.97 | 11.97 x 10% = $1.20 | 11.97 - 1.20 = $10.77 |
| 44 | $10.77 | 10.77 x 10% = $1.08 | 10.77 - 1.08 = $9.69 |
| 45 | $9.69 | 9.69 x 10% = $0.97 | 9.69 - 0.97 = $8.72 |
| 46 | $8.72 | 8.72 x 10% = $0.87 | 8.72 - 0.87 = $7.85 |
| 47 | $7.85 | 7.85 x 10% = $0.79 | 7.85 - 0.79 = $7.06 |
| 48 | $7.06 | 7.06 x 10% = $0.71 | 7.06 - 0.71 = $6.35 |
| 49 | $6.35 | 6.35 x 10% = $0.64 | 6.35 - 0.64 = $5.71 |
| 50 | $5.71 | 5.71 x 10% = $0.57 | 5.71 - 0.57 = $5.14 |
| 51 | $5.14 | 5.14 x 10% = $0.51 | 5.14 - 0.51 = $4.63 |
| 52 | $4.63 | 4.63 x 10% = $0.46 | 4.63 - 0.46 = $4.17 |
| 53 | $4.17 | 4.17 x 10% = $0.42 | 4.17 - 0.42 = $3.75 |
| 54 | $3.75 | 3.75 x 10% = $0.38 | 3.75 - 0.38 = $3.37 |
| 55 | $3.37 | 3.37 x 10% = $0.34 | 3.37 - 0.34 = $3.03 |
| 56 | $3.03 | 3.03 x 10% = $0.30 | 3.03 - 0.30 = $2.73 |
| 57 | $2.73 | 2.73 x 10% = $0.27 | 2.73 - 0.27 = $2.46 |
| 58 | $2.46 | 2.46 x 10% = $0.25 | 2.46 - 0.25 = $2.21 |
| 59 | $2.21 | 2.21 x 10% = $0.22 | 2.21 - 0.22 = $1.99 |
| 60 | $1.99 | 1.99 x 10% = $0.20 | 1.99 - 0.20 = $1.79 |
| 61 | $1.79 | 1.79 x 10% = $0.18 | 1.79 - 0.18 = $1.61 |
| 62 | $1.61 | 1.61 x 10% = $0.16 | 1.61 - 0.16 = $1.45 |
| 63 | $1.45 | 1.45 x 10% = $0.15 | 1.45 - 0.15 = $1.30 |
| 64 | $1.30 | 1.30 x 10% = $0.13 | 1.30 - 0.13 = $1.17 |
| 65 | $1.17 | 1.17 x 10% = $0.12 | 1.17 - 0.12 = $1.05 |
| 66 | $1.05 | 1.05 x 10% = $0.11 | 1.05 - 0.11 = $0.94 |
| Totals | $9,990.15 | $999.06 | $8,991.09 |
Final Answer
m = 10
