how do you calculate the deposit multiplier 
take the federal reserve s reserve requirement for banks divide that figure into 1 the result is the amount of new money that could be created so say the fed s reserve requirement is 18 the deposit multiplier would be 1 18 or 5 55 that means for every 1 in bank reserves 5 55 could be added to the money supply the lower the reserve requirement the greater the amount of money that can be created because more money is available to be lent 