In a system in which all banks have a uniform reserve requirement, the money multiplier is equal to 1 divided by the prime rate.

Name: In a system in which all banks have a uniform reserve requirement, the money multiplier is equal to 1 divided by the prime rate.
Brand: Quizplus
Rating: 4.9 (37 reviews)

Question

Quizplus · Accepted Answer

The money multiplier is actually 1 divided by the reserve requirement ratio, not the prime rate. The prime rate is the interest rate that banks charge their most creditworthy customers, and it does not directly affect the money multiplier.

In a System in Which All Banks Have a Uniform