The ratio of the money supply to the monetary base is called the:
A)currency-deposit ratio.
B)reserve-deposit ratio.
C)high-powered money.
D)money multiplier.

Question

Quizplus · Accepted Answer

The ratio of the money supply to the monetary base is known as the money multiplier. This multiplier shows the effect of a change in reserves on the money supply. The money multiplier is also called the money creation multiplier since the banking system can create money by making new loans when the reserve ratio is less than 100 percent.

The Ratio of the Money Supply to the Monetary Base