If the Central Bank Lowered the Reserve Requirement, What Happens

question 194

Multiple Choice

If the central bank lowered the reserve requirement, what happens to the money multiplier and the money supply?

• A) The money multiplier increases, but the money supply decreases.
• B) The money multiplier decreases, but the money supply increases.
• C) The money multiplier and the money supply both increase.
• D) The money multiplier and the money supply both decrease.

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Definitions:

Self-Employed

An individual who operates a business or trade as a sole proprietor or independent contractor, responsible for their own tax filings and benefits.

Health Savings Account

A tax-advantaged saving account designed for individuals covered under high-deductible health plans to save for medical expenses.

High Deductible Health Plan

A health insurance plan with lower premiums and higher deductibles than traditional health plans, often linked with Health Savings Accounts (HSAs).

Self-Employed Individual

A person who operates their own business or works as an independent contractor, responsible for their own taxes and oftentimes their own schedule and work processes.