If the reserve requirement were decreased from 20 percent to 15 percent, the money multiplier would:
A) increase.
B) decrease.
C) not be affected.
D) change in no predictable way.

Question

Quizplus · Accepted Answer

The money multiplier is inversely related to the reserve requirement. Lowering the reserve requirement allows banks to lend more of their deposits, thereby increasing the money multiplier.

If the Reserve Requirement Were Decreased from 20 Percent to 15