Answer: 4.78
Explanation: Money multiplier could be explained as the maximum amount of commercial bank money that can be created given a certain amount of money in the monetary base under a fractional-reserve banking system. I. Other words, the ratio or statistic of commercial bank money you the central bank money.
In this question, money multiplier is calculated using the relation:
M = (1 + c) ÷ (rr + e + c)
Where:
c = currency deposit ratio
rr = reserve requirement
e = excess reserve ratio
M = money multiplier
M = (1+0.1) / (0.08+0.05+0.1)
M = 1.1 / 0.23
M = 4.78
