Multiple Choice
In a fractional reserve banking system, how does an increase in the reserve requirement change the money multiplier?
A) The money multiplier increases by a higher percentage change than the increase in the reserve ratio.
B) The money multiplier decreases by a higher percentage change than the increase in the reserve ratio.
C) The money multiplier increases by a lower percentage change than the increase in the reserve ratio.
D) The money multiplier decreases by a lower percentage change than the increase in the reserve ratio.
Correct Answer:
Verified
Correct Answer:
Verified
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