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The question is: If the general public decide to keep a greater proportion of their savings...

The question is: If the general public decide to keep a greater proportion of their savings in their wallets rather than in their savings accounts in the banking sector, then the money multiplier will increase and banks can ‘create’ more money. Correct this statement and provide for a brief example proving your case. this is related to money and interest rates and inflation
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Answer #1

Corrected statement:

If the general public decide to keep a greater proportion of their savings in their wallets rather than in their savings accounts in the banking sector, then the money multiplier will decrease and banks can ‘create less money.

Explanation: The money multiplier will fall due to the leakages and this will lower the maximum amount money banks can create.

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