When banks hold excess reserves: a) the reserve ratio should be lowered. b) the money multiplier underestimates how much money will be created in the economy. c) the reserve ratio should be raised. d) It may cause the money multiplier to overestimate how much money will be created in the economy.
When banks hold excess reserves: a) the reserve ratio should be lowered. b) the money multiplier underestimates how much money will be created in the economy. c) the reserve ratio should be raised. d) It may cause the money multiplier to overestimate how much money will be created in the economy.
Chapter25: Money Creation
Section: Chapter Questions
Problem 9SQ
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When banks hold excess reserves:
a) the reserve ratio should be lowered.
b) the money multiplier underestimates how much money will be created in the economy.
c) the reserve ratio should be raised.
d) It may cause the money multiplier to overestimate how much money will be created in the economy.
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