The money multiplier m₁ is always less than or equal to 1/rr.

Name: The money multiplier m 1 is always less than or equal to 1/rr.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The formula for the money multiplier is m = 1/rr, where rr represents the required reserve ratio. Therefore, the maximum value of the money multiplier is 1/rr. Since the money multiplier is the ratio of the amount of money created by banks to the amount of reserves they hold, it cannot exceed the inverse of the reserve ratio. Therefore, the statement is true.

The Money Multiplier M1 Is Always Less Than or Equal

The Money Multiplier M₁ Is Always Less Than or Equal