If a bank keeps some of its excess reserves, the money multiplier:
A) increases.
B) stays the same.
C) goes to zero.
D) decreases.
E) increases, then decreases.

Name: If a bank keeps some of its excess reserves, the money multiplier: A) increases. B) stays the same. C) goes to zero. D) decreases. E) increases, then decreases.
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Question

Quizplus · Accepted Answer

If the bank keeps some of its excess reserves, it decreases the amount of money it can lend out. As a result, the money multiplier decreases.

If a Bank Keeps Some of Its Excess Reserves, the Money