Money Multiplier Calculator

Enter the required reserve ratio into the calculator to determine the money multiplier of an economy or country.

Money Multiplier Formula

The following formula is used to calculate a money multiplier.

MM = 1 / RR

  • Where MM is the money multiplier
  • RR is the required reserve ratio

Money Multiplier Definition

A money multiplier is defined as the rate of credit creation of a federal reserve banking system.

Money Multiplier Example

How to calculate a money multiplier?

  1. First, determine the required reserves.

    Calculate the required reserve ratio.

  2. Next, calculate the money multiplier.

    Calculate the money multiplier using the formula above.


FAQ

What is a money multiplier?

A money multiplier is the rate of credit creation due to the federal reserve banking system that requires a bank to hold a certain amount of deposits in reserve.

What is a required reserve?

The required reserve is the amount of deposits a bank is required to hold at any given point.


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