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:

Continuous Random Variables

Variables capable of assuming countless values within a specified range.

Normal Probability Distribution

A continuous probability distribution characterized by a symmetrical bell-shaped curve, where the mean, median, and mode are all equal.

Standard Normal Distribution

A probability distribution that has a mean of zero and a standard deviation of one, also represented by the standard normal curve.

Z-score

A measure that describes a value's relationship to the mean of a group of values, represented in units of standard deviation.