The Larger the Simple Deposit Multiplier

question 89

Multiple Choice

The larger the simple deposit multiplier,

• A) the higher the required reserve ratio.
• B) the higher the discount rate.
• C) the larger the change in the money supply for a given change in deposits.
• D) the less likely the Fed will be to use its monetary policy tools.

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Definitions:

Equal Payments

A repayment structure where payments are the same amount each period, as seen in some loans and mortgages.

Annuity Due

An annuity whose payments are made at the beginning of each period.

Future Amount

The expected value of an asset or amount of money at a specific date in the future, often factoring in variables like interest rates and compounding periods.

Present Value Concept

A financial calculation that determines the value of a payment or series of payments in the present, by discounting future cash flows.