If the Fed were to decrease the required reserve rate from ten percent to five percent, the simple deposit expansion multiplier would:
A. Double.
B. Decrease by 5 percent.
C. Increase by a factor of five.
D. Be half as large as it was before the reduction.
Answer:A
If the Fed were to decrease the required reserve rate from ten percent to five percent, the simple deposit expansion multiplier would:
A. Double. B. Decrease by 5 percent. C. Increase by a factor of five. D. Be half as large as it was before the reduction.