Questions: Suppose the reserve requirement is set at 14 percent and excess reserves are 36 million. What is the money multiplier?

To determine the money multiplier, we use the formula:

\[ \text{Money Multiplier} = \frac{1}{\text{Reserve Requirement Ratio}} \]

Given that the reserve requirement is 14 percent, we convert this percentage into a decimal for the calculation:

\[ \text{Reserve Requirement Ratio} = 0.14 \]

Now, we calculate the money multiplier:

\[ \text{Money Multiplier} = \frac{1}{0.14} \approx 7.14 \]

Therefore, the answer is the first one: 7.14.

Explanation for each option:

• 7.14: This is the correct answer, as calculated using the formula for the money multiplier with a reserve requirement of 14 percent.
• 0.07: This is incorrect. It seems to be a misinterpretation of the reserve requirement ratio itself, not the money multiplier.
• 257.14: This is incorrect. It is an unrealistic value for a money multiplier given a reserve requirement of 14 percent.
• 5.04: This is incorrect. It does not match the calculated value for the money multiplier with the given reserve requirement.

In summary, the correct money multiplier given a reserve requirement of 14 percent is 7.14.