Solution-Simple deposit multiplier formula

Simple deposit multiplier formula

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Reference no: EM131399213

The simple deposit multiplier formula calculates that if the required reserve ratio is 10%, then an initial checking account deposit of $10,000 will set in motion a sequence of events that will result in a total increase in checking account deposits of $100,000. But in the real world, that $10,000 initial deposit will typically result in a total increase in deposits of only around $16,000. What "real-world" factors account for this difference?

Reference no: EM131399213

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Simple deposit multiplier formula

Reference no: EM131399213

Reference no: EM131399213

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