The money multiplier will be
A) larger if banks hold on to excess reserves but smaller if private citizens hold on to cash.
B) smaller if banks hold on to excess reserves but larger if private citizens hold on to cash.
C) smaller if either banks hold on to excess reserves or private citizens hold on to cash.
D) larger if either banks hold on to excess reserves or private citizens hold on to cash.
E) constant whether or not banks and citizens try to alter their holdings of excess reserves and cash.

Question

Quizplus · Accepted Answer

The money multiplier decreases when banks hold excess reserves or when private citizens hold more cash, as both actions reduce the amount of money available for lending and circulation.

The Money Multiplier Will Be