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Simple Deposit Multiplier Formula

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Simple Deposit Multiplier is a a concept that represents the potential increase in the money supply through the process of fractional reserve banking. Check FAQs

SD m = \frac{1}{rrr}

SD_m - Simple Deposit Multiplier?rrr - Required Reserve Ratio?

Simple Deposit Multiplier Example

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Here is how the Simple Deposit Multiplier equation looks like with Values.

Here is how the Simple Deposit Multiplier equation looks like with Units.

Here is how the Simple Deposit Multiplier equation looks like.

1.1111 = \frac{1}{0.9}

1.1111 = \frac{1}{0.9}

1.1111 = \frac{1}{0.9}

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Simple Deposit Multiplier Solution

Follow our step by step solution on how to calculate Simple Deposit Multiplier?

FIRST Step Consider the formula

SD m = \frac{1}{rrr}

Next Step Substitute values of Variables

∴

SD m = \frac{1}{0.9}

Next Step Prepare to Evaluate

∴

SD m = \frac{1}{0.9}

Next Step Evaluate

∴

SD m = 1.11111111111111

LAST Step Rounding Answer

∴

SD m = 1.1111

Simple Deposit Multiplier Formula Elements

Variables

Simple Deposit Multiplier

Simple Deposit Multiplier is a a concept that represents the potential increase in the money supply through the process of fractional reserve banking.

Symbol: SD_m

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Simple Deposit Multiplier

Required Reserve Ratio

Required Reserve Ratio refers to the percentage of deposits that a commercial bank must hold in reserve i.e. that the money cannot be loaned out or invested.

Symbol: rrr

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Required Reserve Ratio

Other formulas in Macroeconomics category

Go Growth Rate of Money Supply

g m = R + g y

Go Real Effective Exchange Rate

REER = \frac{CPI d \cdot NEER}{CPI f}

Go Real Gross Domestic Product Per Capita

RGDPPC = \frac{RG}{TP}

Go Real Wage

RW = \frac{NW}{CPI}

How to Evaluate Simple Deposit Multiplier?

Simple Deposit Multiplier evaluator uses Simple Deposit Multiplier = 1/Required Reserve Ratio to evaluate the Simple Deposit Multiplier, Simple Deposit Multiplier refers to the maximum potential increase in the money supply based on assumption that banks lend out the excess reserves they hold. Simple Deposit Multiplier is denoted by SD_m symbol.

How to evaluate Simple Deposit Multiplier using this online evaluator? To use this online evaluator for Simple Deposit Multiplier, enter Required Reserve Ratio (rrr) and hit the calculate button.

FAQs on Simple Deposit Multiplier

What is the formula to find Simple Deposit Multiplier?

The formula of Simple Deposit Multiplier is expressed as Simple Deposit Multiplier = 1/Required Reserve Ratio. Here is an example- 1.111111 = 1/0.9.

How to calculate Simple Deposit Multiplier?

With Required Reserve Ratio (rrr) we can find Simple Deposit Multiplier using the formula - Simple Deposit Multiplier = 1/Required Reserve Ratio.

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