If the central bank in some country lowered the reserve ratio,the money multiplier
A)would increase.
B)would not change.
C)would decrease.
D)could do any of the above.

Question

Quizplus · Accepted Answer

When the central bank lowers the reserve ratio, banks are required to hold a lower amount of reserves against their deposits. This means that they can lend out more money and the money supply as a whole will increase. Therefore, the money multiplier will increase, allowing for a greater expansion of the money supply.

If the Central Bank in Some Country Lowered the Reserve