Suppose the M1 Multiplier Is Currently 1

question 21

Multiple Choice

Suppose the M1 multiplier is currently 1.95 and the M2 multiplier is currently 8.03.If people decide to decrease the ratio of nontransaction accounts they hold relative to the amount of their transactions accounts, the M1 multiplier will____ and the M2 multiplier will _____-.

• A)not change; decrease
• B)increase; also increase
• C)decrease; also decrease
• D)increase; not change

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