If the required reserve ratio is 10 percent, currency in circulation is $1,200 billion, checkable deposits are $1,600 billion, and excess reserves total $2,500 billion, then the m1 money multiplier is

a. 2.5.
b. 7.3.
c. 1.7.
d. 0.73.

Option D.

Step-by-step explanation:

Given information:

Required reserve ratio (rr)= 10%= 0.1

Currency in circulation (C)= $1,200 billion

Checkable deposits (D)= $1,600 billion

Excess reserves total (ER)= $2,500 billion

The formula for the M1 money multiplier is

where, C is currency in circulation, D is deposits, ER is excess reserve and rr is required reserve ratio.

Substitute the given values in the above formula.

The M1 money multiplier is 0.73. Therefore, the correct option is D.

2nd one in the first row is correct

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step-by-step explanation: