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.

---

Definitions:

Hire-Purchase

A contractual agreement where an asset is leased for a period, with the option to purchase at the end of the lease term.

Title

Title refers to the legal right to own or use property, evidenced by a document showing ownership such as a deed.

Buyer

A person or entity that purchases goods or services from another.

Agreement

A mutual understanding or arrangement, typically formalized by a contract, between two or more parties regarding their rights and obligations.