Which of the Following Statements Is False

question 86

Multiple Choice

Which of the following statements is false?

• A)The total expansion of deposits is a multiple of the initial injection of reserves into the banking system.
• B)In the simplest model, ignoring excess reserves and a currency drain, deposits equal the quantity of reserves times the multiplier, where the multiplier is equal to the reciprocal of the reserve requirement ratio.
• C)The lower the reserve requirements, the larger the multiplier; the higher the reserve requirements, the smaller the multiplier.
• D)In a more developed model, where excess reserve and currency holdings are taken into account, the multiplier is larger than in the simple model and is influenced by the behavior of banks and the public.

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