Calculate the money multiplier, given the following: suppose the currency-to-deposit ratio is 0.25, the excess reserve-to-deposit ratio is 0.05, and the required reserve ratio is 0.10. Finally, which will have a larger impact on the money multiplier: a rise of 0.05 in the currency ratio or in the excess reserve ratio?

1. Initially, the money multiplier is m =
2. If the currency-to-deposit ratio rises to 0.30, the money multiplier will be m =
3. If, instead, the excess reserve-to-deposit ratio rises to 0.10, the money multiplier will be m =
4. So, multiplier falls by more with the increase in the: