What happens to the value of the deposit multiplier when banks hold excess reserves?
A) It is larger than the value implied by the formula.
B) It is smaller than the value implied by the formula.
C) It is only affected by the amount of loans that banks are willing to make, not the amount of excess reserves held.
D) There is insufficient information to answer the question.
Answer: B) It is smaller than the value implied by the formula.
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An airline company
A) cannot price discriminate because it is against the law. B) price discriminates by charging higher prices to business travelers. C) price discriminates by charging lower prices to business travelers. D) price discriminates even though its profits are lower because competition forces it to do so. E) has fewer customers because it price discriminates than it would have if it did not price discriminate.
Which of the following represents the change in the capital stock?
A) consumption minus depreciation B) output minus depreciation C) investment minus saving D) investment minus depreciation