The Simple Deposit Expansion Multiplier Is Really Too Simple for Understanding

question 18

Multiple Choice

The simple deposit expansion multiplier is really too simple for understanding the link between changes in a central bank's balance sheet and the quantity of money in the economy because it:

• A)Ignores how central banks could change their balance sheet
• B)Assumes banks loan hold no excess reserves
• C)Ignores the fact people might change their currency holdings
• D)Ignores changes in vault cash

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