In an attempt to bring lenders and borrowers together following the financial crisis of 2008,the Federal Reserve made a large amount of new funds available to financial markets.The Fed expected this to increase the money supply and the total amount of lending because of the multiplier effect,in which a given amount of new reserves results in a multiple increase in

Question

Quizplus · Accepted Answer

The multiplier effect refers to the fact that an increase in bank reserves can lead to a multiple increase in the amount of money that banks can lend out, which in turn can increase the total amount of bank deposits. Therefore, the correct answer is B, bank deposits. The other options listed (stockholders' equity, long-term debt, and required reserves) are not directly related to the multiplier effect.

In an Attempt to Bring Lenders and Borrowers Together Following