Money Multiplier Calculator - Money Supply
Calculate the money multiplier effect and maximum potential money creation from bank reserves. Economics calculator for monetary policy, banking, and macroeconomics students. Supports reserve ratio, excess reserves, and deposit multiplier calculations.
Money Multiplier
m = 1 / RRVariables:
- mMoney multiplierMoney multiplier
- RRReserve requirement ratio (0-1)Reserve requirement ratio (0-1)
How to Use the KalkuLab Money Multiplier Calculator
- 1
Enter Reserve Ratio
Enter the reserve requirement ratio (RR) as a decimal or percentage.
- 2
Enter Initial Deposit
Enter the initial money deposited in the banking system.
- 3
Calculate
Get the money multiplier and total money supply.
Examples
10% Reserve Ratio
Problem:
RR=10%, initial money=$1 billion. What is total money supply?
Solution:
- 1.m = 1 / 0.1 = 10
- 2.Total = $1B × 10 = $10B
Result:m = 10, Total = $10 billion
With a 10% reserve ratio, $1 billion in initial deposits can create $10 billion in money supply.
Frequently Asked Questions
What is the money multiplier?
The money multiplier (m = 1/RR) shows how much total money supply increases from an initial deposit through fractional reserve banking.
What happens when the reserve ratio falls?
A lower reserve ratio increases the money multiplier, expanding the money supply more from each deposit.