When excess reserves increase, the deposit multiplier is
A)increased.
B)decreased.
C)staying the same.
D)None of the above is correct.

Question

Quizplus · Accepted Answer

When excess reserves increase, banks can lend out less money because they already have enough reserves to cover any deposits that may be withdrawn. This decreases the deposit multiplier, as less money is being created through the banking system.

When Excess Reserves Increase, the Deposit Multiplier Is