how do you determine the money multiplier in economics?

Question

here is the question if anyone can help me out

Suppose the currency drain is 33.33 percent and the desired reserve ratio is 10 percent. The money multiplier equals?

Answer 1

The simple money multiplier is 1/reserve ratio, which would be 10. However, this is the simple money multiplier and does not take into effect the currency drain. This would change it to this:
((1-.3333)/.1) +.3333=7.

The money multiplier in this question would be 7. This means that 1/3 of the currency is not held as deposits but is held in cash. Thus, the money held as deposits, or .6667 will be multiplied. The other .3333 is not multiplied but is still part of the money supply. Adding the two together gives you the 7.

Answer 2

Money Multiplier Formula

Answer 3

This Site Might Help You.

RE:
how do you determine the money multiplier in economics?
here is the question if anyone can help me out

Suppose the currency drain is 33.33 percent and the desired reserve ratio is 10 percent. The money multiplier equals?

Answer 4

multiplier = (cr+1)/(cr+rr)

were cr is the ratio of currency to deposit (your currency drain) and rr is the reserve ratio

thus,

the money multiplier is (.3333+1)/(.3333+.1)
1.3333/0.4333
=3.077