Compute the potential expansion of deposits from a reserve requirement.
Please do not make financial decisions based on these results.
What is the Money Multiplier Calculator?
Compute the potential expansion of deposits from a reserve requirement. To use the Money Multiplier Calculator, enter reserve ratio, initial deposit; it returns money multiplier, maximum deposits created, new money created, and shows them instantly as you type.
Where the Money Multiplier Calculator fits
Compute the potential expansion of deposits from a reserve requirement. The main figure it returns is the Money multiplier, worked out from the values you enter.
It belongs with the other macroeconomics tools. If you are comparing options or checking a result from another angle, try the Velocity of Money Calculator, Spending Multiplier Calculator or the Money Supply Calculator.
How to use the Money Multiplier Calculator
- Enter your numbers. The inputs are Reserve ratio (%), Initial deposit ($). Use real figures from your own records where you can. Fields marked optional can stay at zero.
- Read the result. The highlighted box gives the Money multiplier, and the cards below show Maximum deposits created, New money created. Tables and charts break it down further.
- Test other scenarios. Results update as you type. Change one value at a time to see what drives the answer, and press Reset to go back to the defaults.
Formula and how it works
Example with real numbers
Here is the Money Multiplier Calculator using the default values shown in the calculator above:
Inputs
| Reserve ratio (%) | 10 |
|---|---|
| Initial deposit ($) | 100,000 |
Results
| Money multiplier | 10× |
|---|---|
| Maximum deposits created | $1,000,000.00 |
| New money created | $900,000.00 |
With these inputs the calculator returns Money multiplier: 10×. Change any value in the calculator to see how the result moves.
What if you change one input?
Sensitivity check: raising Reserve ratio (%) from 10 to 12 (about 20% higher) and leaving everything else as in the example above changes the results like this:
| Result | Example | After the change | Change |
|---|---|---|---|
| Money multiplier | 10× | 8.33× | -16.7% |
| Maximum deposits created | $1,000,000.00 | $833,333.33 | -16.7% |
| New money created | $900,000.00 | $733,333.33 | -18.5% |
The input that moves the result most is the one to check twice. Change it in the calculator above to test your own case.
What the results tell you
The results panel of the Money Multiplier Calculator reports Money multiplier, maximum deposits created and new money created. Compare these figures while changing one input at a time, and use the related calculators below to look at the same situation from another angle.
Method and limits. This calculator applies the formula in the section above to your inputs, in your browser; nothing you enter is stored on our servers. The result is only as accurate as the numbers you enter and the formula shown above. It is for information, not financial, tax or legal advice.
Frequently asked questions
Does the money multiplier always hold?
Only if banks lend all excess reserves and borrowers redeposit the money.
What is the difference between nominal and real GDP?
Nominal GDP uses current prices; real GDP removes price changes using a deflator so output can be compared over time.
What is the spending multiplier?
It is 1 divided by one minus the marginal propensity to consume, so an MPC of 0.8 gives a multiplier of 5.
Are the results guaranteed?
No. Results depend entirely on the numbers you enter and the formulas shown on this page. Please do not make financial decisions based on them alone; confirm important figures with a licensed professional.
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