Circulation 69814

The economy's money is 600 PJ (monetary units). The proportion of cash is 5%. All cash is in circulation, and none is hoarded. The optimal reserve ratio is 12%. Calculate the money multiplier

Correct answer:

M =  8.7719

Step-by-step explanation:

A=600 PJ q=5%=1005=201=0.05  H=q A=0.05 600=30 PJ  r=12%=10012=253=0.12  M r (AH)=A M 0.12 (60030)=600  68.4M=600  M=68.4600=8.77192982  M=575008.77193=8.7719



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