Higher the cash-ratio, higher is the money multiplier.

Name: Higher the cash-ratio, higher is the money multiplier.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The cash ratio does not directly affect the money multiplier. The money multiplier is primarily influenced by the reserve ratio (the fraction of deposits banks are required to hold as reserves), not the cash ratio. Higher reserve requirements typically lead to a lower money multiplier, as banks have less capacity to create additional money through lending.

Higher the Cash-Ratio, Higher Is the Money Multiplier