Real-world accuracy of the money multiplier can be affected by:
A) the income tax rate set by the government.
B) the way the public divides its holding of M1 between currency and certificates of deposit.
C) an increase in government spending.
D) the President's decision to alter the money multiplier.

Question

Quizplus · Accepted Answer

The money multiplier's real-world accuracy is influenced by how the public chooses to hold its money, such as the division between currency and other forms like certificates of deposit. This affects the banking system's ability to create money through lending.

Real-World Accuracy of the Money Multiplier Can Be Affected By