Everything else held constant, a decrease in the currency ratio will mean ________ in the M2+ money multiplier.

Question

Quizplus · Accepted Answer

A decrease in the currency ratio, which indicates a lower preference for holding currency relative to deposits, leads to an increase in the M2+ money multiplier. This is because more money is being kept in banks, which can then be lent out, effectively increasing the money supply through the multiplier effect.

Everything Else Held Constant, a Decrease in the Currency Ratio