Value of Money Multiplier ………………(increases/decreases/remains unchanged) with an increase in Cash Reserve Ratio.
(Fill up the blank with correct alternative)
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Answered by
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Answer:
money multiplier increases
Answered by
14
Answer:
Value of ‘Money Multiplier’ decreases with an increase in ‘Cash Reserve Ratio’.
Explanation:
When the reserve ratio is high there will a lesser amount of excess reserves as a result of which banks will give out lesser loans. This will bring down the value of the multiplier.
When the bank reserve ratio is less there will be more amount of excess reserves due to which the banks will be able to give out more loans and the value of the multiplier will be high.
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