Apr 21 2012

Money Multiplier

Published by at 7:47 pm under

1/RRR (required reserve ratio). Tells the total amount by which total deposits will increase by in the banking system following an initial change in checkable deposits. For example: an initial injection of $1000 of new money into an economy with a reserve ratio of 0.1 will generate $1000 x (10) = $10,000 in total money.


About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

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