According to the simple money multiplier formula, if the reserve ratio is 0.2, the money multiplier equals:

CA Foundation · Business Economics · MTP · May 2026
According to the simple money multiplier formula, if the reserve ratio is 0.2, the money multiplier equals:
(A) A. 2
(B) B. 5
(C) C. 20
(D) D. 0.2

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. 5

Topics: Money Market

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