A reduction in the minimum required reserve ratio will reduce the money multiplier.

Name: A reduction in the minimum required reserve ratio will reduce the money multiplier.
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Question

Quizplus · Accepted Answer

A reduction in the minimum required reserve ratio increases the money multiplier because banks can lend out a larger portion of their deposits, thereby increasing the amount of money created through the lending process.

A Reduction in the Minimum Required Reserve Ratio Will Reduce