Solution

The ratio of high-powered money to the total amount of money in the economy in a given year is known as the money multiplier. The money multiplier is defined by the formula below:
MM=S/H
MM=Money multiplier
S = economy's money stock.
H=High-powered currency
The ratios of high-powered money to the total amount of money in the economy define the multiplier's worth. The amount of reserves kept by banks and the amount of currency in circulation both influence how much high-powered money is worth.
The reserve deposit ratio (RDR) and currency deposit ratio (CDR) are important factors in determining the money multiplier's value.