QUESTION 2 The higher the required reserve ratio, _____. a. the more the money that can...
QUESTION 2
The higher the required reserve ratio, _____. a. the more the money that can be lent in each round of the money-creation process b. the more the excess reserves after each round of the money-creation process c. the lower the demand for cash by the non-banking public d. the smaller the money multiplier e. the larger the money multiplier
Homework Answers
Solution: the smaller the money multiplier
Explanation: Money multiplier is computed as 1/Reserve Requirement Ratio. Higher the required reserve ratio, lower the money multiplier, and lesser the banks can lend as loans as there are lesser the excess reserves
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QUESTION 2
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