Questions: In Canada in 2014, the currency drain ratio was 11 percent of deposits and the reserve ratio was 0.03 percent of deposits. Calculate the Canadian money multiplier. The Canadian money multiplier was

To calculate the Canadian money multiplier, we use the formula for the money multiplier in a fractional reserve banking system:

\[ \text{Money Multiplier} = \frac{1}{\text{Reserve Ratio} + \text{Currency Drain Ratio}} \]

Given:

• Currency Drain Ratio = 11% = 0.11
• Reserve Ratio = 0.03% = 0.0003

Substitute these values into the formula:

\[ \text{Money Multiplier} = \frac{1}{0.0003 + 0.11} \]

\[ \text{Money Multiplier} = \frac{1}{0.1103} \]

\[ \text{Money Multiplier} \approx 9.06 \]

Therefore, the Canadian money multiplier was approximately 9.06.