The money multiplier is greater than 1 because most banks keep more than 100% of any increase in bank deposits as reserves.

Question

Quizplus · Accepted Answer

The money multiplier is actually less than 1 because banks are required to keep a certain percentage of their deposits as reserves (known as the reserve requirement ratio), which limits the amount of money that can be created through the banking system. Therefore, the statement in the question is incorrect.

The Money Multiplier Is Greater Than 1 Because Most Banks