________ increases the size of the money multiplier.
A) An increase in the currency drain
B) An open market purchase of government securities by the Fed
C) A reduction in the desired reserve ratio
D) An open market sale of government securities by the Fed
E) An increase in the size of open market operations

Question

Quizplus · Accepted Answer

A reduction in the desired reserve ratio allows banks to lend more of their deposits, increasing the money multiplier.

________ Increases the Size of the Money Multiplier