If the Fed were to increase the required reserve rate from ten percent to twenty percent, the simple deposit expansion multiplier would:
A. Double.
B. Increase by 10 percent.
C. Decrease by a factor of ten.
D. Be half as large as it was before the increase.
Answer:D
If the Fed were to increase the required reserve rate from ten percent to twenty percent, the simple deposit expansion multiplier would:
A. Double. B. Increase by 10 percent. C. Decrease by a factor of ten. D. Be half as large as it was before the increase.