Multiple Choice
The actual money multiplier is smaller than the simple money multiplier because
A) the actual multiplier involves M2 rather than M1
B) cash withdrawals reduce the amount banks can lend out
C) withdrawals from checkable deposits increase the amount of excess reserves each bank receives
D) the Fed wants to reduce the money supply
E) the actual multiplier uses a different measure of reserve requirements
Correct Answer:
Verified
Correct Answer:
Verified
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