If the reserve ratio is raised from 10% to 20%, the money multiplier

falls from 10 to 5Correct answerYour answerrises from 5 to 10Correct answerYour answerstays at 10Correct answerYour answerfalls from 10 to 8Correct answerYour answer

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CorrectNot quiteAnswer A

Correct answer: A

1 ÷ 0.1 = 10 and 1 ÷ 0.2 = 5.
Doubling the reserve ratio halves the multiplier.

Concept: A higher reserve ratio
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe money multiplier

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Ten questions from Money Creation by Banks, at your own pace.

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If the reserve ratio is raised from 10% to 20%, the money multiplier

Explanation