Explain what a potential money multiplier of 3 means. How can the Fed increase the potential money multiplier?
It means that every $1 increase in demand deposits can potentially support new demand deposits of $3 . The
Fed can increase the potential money multiplier by lowering the legal reserve requirement.
Economics
You might also like to view...
Taxes can be progressive, regressive, or proportional
What will be an ideal response?
Economics
The money market model is concerned with ________ and the loanable funds market model is concerned with ________
A) short-term nominal interest rates; long-term real interest rates B) short-term nominal interest rates; long-term nominal interest rates C) short-term real interest rates; long-term nominal interest rates D) short-term real interest rates; long-term real interest rates
Economics