If financial intermediaries decide to increase their liquidity ratios, the money multiplier increases.

Name: If financial intermediaries decide to increase their liquidity ratios, the money multiplier increases.
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Question

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When financial intermediaries increase their liquidity ratios, they hold more reserves relative to deposits, reducing the amount available for lending. This decreases the money multiplier, as less money is created through the lending process.

If Financial Intermediaries Decide to Increase Their Liquidity Ratios, the Money