(Table) Consider the T-Account in the Table A) the Potential Money Multiplier and the Actual Money Multiplier

question 125

Multiple Choice

(Table) Consider the T-account in the table. If the reserve requirement is 20%, then: $$\begin{array} { | l | l | } \hline \text { Assets } & \text { Liabilities } \\\hline \$ 25,000 \text { (cash) } & \begin{array} { l } \$ 50,000 \text { (checking account } \\\text { balances) }\end{array} \\\hline \$ 50,000 \text { (loans) } & \begin{array} { l } \$ 25,000 \text { (loan recipients' checking } \\\text { account balances) }\end{array} \\\hline\end{array}$$

• A) the potential money multiplier and the actual money multiplier are the same.
• B) the potential money multiplier is larger than the actual money multiplier.
• C) the potential money multiplier is smaller than the actual money multiplier.
• D) the actual money multiplier is zero.