Assuming Initially That the Required Reserve Ratio = 15%,the Currency-Deposit

question 141

Multiple Choice

Assuming initially that the required reserve ratio = 15%,the currency-deposit ratio = 40%,and the excess reserve ratio = 5%,a decrease in the excess reserve ratio to 0% causes the M1 money multiplier to ________,everything else held constant.

• A)increase from 2.33 to 2.55
• B)decrease from 2.55 to 2.33
• C)increase from 1.67 to 1.82
• D)decrease from 1.82 to 1.67

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