If the spread of ATMs made it more likely for people to hold their money in banks, the potential money multiplier probably _____ and the actual money multiplier probably _____, ceteris paribus.
A) did not change; rose
B) did not change; fell
C) rose; did not change
D) rose; rose

Question

Quizplus · Accepted Answer

The spread of ATMs may encourage people to hold more money in banks, which increases bank reserves. However, this increase in reserves does not necessarily result in a corresponding increase in the money supply, as the bank may choose not to lend out the additional funds. Thus, the potential money multiplier (the maximum amount the money supply could increase if all banks lent out their excess reserves) did not change, but the actual money multiplier (the amount the money supply actually increased due to increased lending) likely rose as a result of more people using ATMs and holding their money in banks.

If the Spread of ATMs Made It More Likely for People