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

- Reserve Ratio Calculator
- Excess Reserves Calculator
- Money Supply Calculator
- Velocity of Money Calculator

## 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?

**First, determine the required reserves.**Calculate the required reserve ratio.

**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.