The Actual Money Multiplier Is Smaller Than the Simple Money

question 78

Multiple Choice

The actual money multiplier is smaller than the simple money multiplier because:

• A)the actual multiplier affects M2 rather than M1.
• B)cash withdrawals reduce the amount banks can lend out.
• C)the actual multiplier affects the amount of excess reserves each bank holds.
• D)the size of the simple multiplier depends on the volume of deposits unlike the actual multiplier.
• E)the actual multiplier uses a different measure of reserve requirements.

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Definitions:

Independent Variable

A variable in an experiment or study that is manipulated to observe its effect on a dependent variable.

SSE

Squared Error Sum, a statistical metric that quantifies the difference between observed data and a predictive model's estimates.

Sample Correlation Coefficient

A statistical measure that calculates the strength and direction of a linear relationship between two quantitative variables in a sample.

Dependent Variable

The variable in an experiment or study that is affected by changes in the independent variable, and which researchers aim to measure or predict.