1.   Profitability High liquidity ratios indicate short-term financial strength but do not measure efficiency of utilization of resources.

2.   High liquidity ratios indicate short-term financial strength but do not measure efficiency of utilization of resources.

3.   Institutions thus have to make a judgement as to what liquidity ratio is best -- one that is neither too high nor too low.

4.   In this simple world, therefore, the money multiplier is the inverse of the liquidity ratio.

5.   By how much will total deposits have expanded?

6.   What is the size of the money multiplier?