Economics
Money Multiplier Effect
Quick fact
With a 10% reserve requirement, the theoretical money multiplier is 10, meaning an initial $1,000 deposit could ultimately support $10,000 in new money through the banking system.
Why this is interesting
When you deposit $100 in a bank, did you know that bank can create up to $900 more in the economy? How does a single deposit multiply into a loan cascade that expands the entire money supply?