As the reserve ratio increases, the money multiplier
A)increases.
B)does not change.
C)decreases.
D)could do any of the above.

Name: As the reserve ratio increases, the money multiplier A)increases. B)does not change. C)decreases. D)could do any of the above.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The money multiplier is given by the formula MM=1/RR, where RR is the reserve ratio. Therefore, as the reserve ratio increases, the denominator of this fraction increases, causing the overall money multiplier to decrease.

As the Reserve Ratio Increases, the Money Multiplier