Which Statement Does NOT Explain Why the Actual Money Multiplier

question 258

Multiple Choice

Which statement does NOT explain why the actual money multiplier and the potential money multiplier are different?

• A) Banks hold excess reserves during tough economic times.
• B) The interest rate that banks pay on deposits is very low.
• C) Foreign deposits in American banks are not counted in the actual money multiplier.
• D) Foreign consumers, businesses, and governments hold U.S. dollars.

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Definitions:

Range P₁P₂

The difference in price levels denoted as P₁ and P₂, often used to describe a price range in economic analysis.

Beef Demanded

The quantity of beef consumers are willing and able to purchase at a given price within a specified time period.

Price Increase

A rise in the cost of goods or services, affecting consumption patterns and inflation rates.

Elasticity

A measure of the responsiveness of quantity demanded or supplied to a change in one of its determinants, such as price or income.