Money Multiplier Calculator

Calculate Simple Money Multiplier and Money Supply Expansion

The Money Multiplier Calculator calculates the macroeconomic simple money multiplier and the potential expansion of money supply within a fractional reserve banking system. Commercial banks turn central bank reserves and customer deposits into additional loans, multiplying the initial monetary base across the economy.

Money Multiplier Equations

The theoretical maximum money multiplier and overall money supply expansion are calculated as follows:

$$\text{Money Multiplier (m)} = \frac{1}{\text{Reserve Ratio (RR)}}$$

$$\text{Total Money Supply (\Delta M)} = \text{Initial Deposit} \times m$$

How to Use the Calculator

1. Enter the central bank's Required Reserve Ratio percentage (RR %).
2. Enter the initial reserve deposit or cash injection amount.
3. Observe the computed Money Multiplier value (e.g. 10x for a 10% reserve requirement).
4. Review the maximum total money supply and net new credit generated in the commercial banking system.