An increase in the banking system's willingness to lend will cause the money multiplier to:
A) increase.
B) decrease.
C) remain unchanged.
D) become difficult to predict.

Question

Quizplus · Accepted Answer

An increase in the banking system's willingness to lend will increase the amount of loans and deposits, which in turn increases the potential amount of money that can be created through the money multiplier process. Therefore, the money multiplier will increase.

An Increase in the Banking System's Willingness to Lend Will