The demand deposit multiplier __________ as the required reserve ratio __________.

Name: The demand deposit multiplier __________ as the required reserve ratio __________.
Brand: Quizplus
Rating: 4.9 (53 reviews)

Question

Quizplus · Accepted Answer

The demand deposit multiplier is the inverse of the required reserve ratio, so as the required reserve ratio decreases, the demand deposit multiplier increases. Therefore, a decrease in the required reserve ratio will result in a larger expansion of the money supply, leading to an increase in the demand deposit multiplier.

The Demand Deposit Multiplier __________ as the Required Reserve Ratio