Which of the following is not true of the demand deposit multiplier?
A) Its formula is 1/RRR.
B) It represents the change in demand deposits generated by a change in reserves.
C) It represents the change in demand deposits generated by a change in taxes.
D) It is a way to determine the effect on money supply from a given Federal Reserve action.
E) It ignores changes in the behavior of the public and the banks.
Correct Answer:
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