________ in the desired reserve ratio will ________ the money multiplier.
A) An increase; have no effect on
B) An increase; decrease
C) A decrease; decrease
D) A decrease; will have no effect on

Question

Quizplus · Accepted Answer

An increase in the desired reserve ratio means banks want to hold more reserves compared to the deposits they receive, which effectively reduces the amount of money they can lend out. This reduction in lending capacity decreases the money multiplier, as the money multiplier is inversely related to the reserve ratio.

________ in the Desired Reserve Ratio Will ________ the Money

in the Desired Reserve Ratio Will the Money