The money multiplier gives us

Question

Quizplus · Accepted Answer

The money multiplier measures the maximum potential change in total deposits that can occur due to a change in reserves. This is because banks are able to create money by making loans based on the reserves they hold. Therefore, a change in reserves can have a multiplication effect on the money supply through the lending process. Option A refers to the relationship between real national income and the money supply, which is not directly related to the money multiplier. Option B is the opposite of what the money multiplier measures. Option D is also not directly related to the money multiplier.

The Money Multiplier Gives Us