The size of the money multiplier is inversely related to the size of the reserve requirement.

Question

Quizplus · Accepted Answer

The money multiplier indicates how much the money supply can increase based on the reserve requirement. A lower reserve requirement means banks can lend out more of their deposits, leading to a larger money multiplier, while a higher reserve requirement restricts lending capacity, resulting in a smaller money multiplier.

The Size of the Money Multiplier Is Inversely Related to the Size