Assuming initially that the required reserve ratio = 15%,the currency-deposit ratio = 40%,and the excess reserve ratio = 5%,a decrease in the excess reserve ratio to 0% causes the M1 money multiplier to ________,everything else held constant.

Question

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The M1 money multiplier is calculated as 1 + (currency-deposit ratio) / (required reserve ratio + currency-deposit ratio + excess reserve ratio). A decrease in the excess reserve ratio increases the denominator, leading to an increase in the money multiplier.

Assuming Initially That the Required Reserve Ratio = 15%,the Currency-Deposit