The money multiplier is the amount the:

Question

Quizplus · Accepted Answer

The money multiplier is the amount by which the money supply can potentially increase with each dollar increase in reserves held by banks. It is calculated as the reciprocal of the reserve requirement ratio. This means that if the reserve requirement ratio is 10%, the money multiplier would be 10, and the money supply could potentially increase by a factor of 10 for each dollar increase in reserves. Therefore, choice A is the correct answer.

The Money Multiplier Is the Amount The