Why is it difficult for policy makers to rely on the theoretical discussion of the money multiplier to target the money supply?

Question

Quizplus · Accepted Answer

The money multiplier theory assumes a stable relationship between the monetary base and the money supply, primarily through the banking system's lending activities. However, in practice, the amount of excess reserves (funds banks hold beyond the required minimum) and cash in circulation can fluctuate significantly due to various factors such as economic conditions, regulatory changes, and banks' own lending decisions. These fluctuations make it difficult for policymakers to predict or control the money supply accurately through the money multiplier concept.

Why Is It Difficult for Policy Makers to Rely on the Theoretical