If the Fed Increases the Reserve Ratio from 5 Percent

question 123

Multiple Choice

If the Fed increases the reserve ratio from 5 percent to 12.5 percent,then the money multiplier

• A)decreases from 20 to 8.
• B)decreases from 12.5 to 5.
• C)increases from 8 to 20.
• D)increases from 5 to 12.5.

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