Practice question · Estimate
Banks hold a 25% reserve ratio. Set the slider to the money multiplier.
Estimate on a scale from 0 to 20.
Hints
- Multiplier .
- .
Show the answer
4 (answers within ±0.3 count)
Why
: each euro of base money supports up to four euros of deposits. Tighten the ratio and the same base carries less money, the quiet lever behind the loud one.
Practise Monetary Policy
The app has 6 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on Monetary Policy
- Order the transmission of a rate cut from decision to prices.
- Sort each situation by the monetary policy it calls for.
- Match each link of the transmission chain to its description.
- Why do central banks act on _forecasts_ of inflation rather than waiting for inflation to appear?
- A central bank cuts rates to zero and the economy still stagnates. Why does the tool lose its grip there?
- Which effects follow a central-bank rate _cut_, all else equal?