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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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