The money multiplier and the required reserve ratio are:

Question

Quizplus · Accepted Answer

The money multiplier and the required reserve ratio are inversely related. This means that as the required reserve ratio increases, the money multiplier decreases, and vice versa. This is because the required reserve ratio determines the amount of money that banks can lend out; the higher the required reserve ratio, the less money banks have available to lend out and therefore the lower the money multiplier.

The Money Multiplier and the Required Reserve Ratio Are