If legal reserve ratio is 20%, the value of money multiplier would be ______.

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KollegeApply · Accepted Answer

If legal reserve ratio is 20%, the value of money multiplier would be 5. Explanation: The money multiplier is calculated as the reciprocal of the legal reserve ratio (LRR). The formula is: Money Multiplier = 1/"legal Reserve Ratio" If the legal reserve ratio is 20%, the money multiplier is: Money Multiplier = $\frac{1}{0}$.20 = 5 Thus, the value of the money multiplier would be 5.

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