Exit Ticket Monetary multiplier

Exit Ticket Monetary multiplier

12th Grade

5 Qs

quiz-placeholder

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Exit Ticket Monetary multiplier

Exit Ticket Monetary multiplier

Assessment

Quiz

Social Studies

12th Grade

Easy

Created by

Natalia Dadidou

Used 1+ times

FREE Resource

5 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does the Monetary Multiplier measure in an economy?

The speed at which money changes hands

The total amount of deposits created from an initial deposit

The amount of reserves a bank must hold against deposits

The interest rate set by the central bank

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following formulas represents the Monetary Multiplier?

1 / Reserve Ratio

Reserve Ratio / Money Supply

Money Supply × Interest Rate

Interest Rate / Reserve Ratio

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

If a bank has a reserve requirement of 20%, what is the Monetary Multiplier?

4

5

10

20

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Why is the Monetary Multiplier important in monetary policy?

It determines the amount of physical currency in circulation

It affects the money supply, impacting inflation and economic growth

It only influences the interest rate charged by banks

It stabilizes exchange rates in the foreign currency market

5.

OPEN ENDED QUESTION

3 mins • 1 pt

If a bank receives a deposit of $500 and the reserve ratio is 8%, how much could this deposit potentially increase the total money supply, assuming full application of the monetary multiplier? Show your calculations.

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Answer explanation

With a reserve ratio of 8%, the monetary multiplier is 1/0.08 = 12.5. Thus, a $500 deposit can increase the money supply by $500 x 12.5 = $6250.