How is money multiplier estimated in relation to CRR?

Dear Student,

The multiple by which money in the economy increases as a result of an increase in the initial deposit with commercial banks in known as money multiplier. It is computed as follows:

Money multiplier = 1CRR

  • 3
it creates credit creating power in excess reserves
  • 0
Credit multiplier= 1/CRR
  • 0
What are you looking for?