Question

The size of the money multiplier is: Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices not fixed but depends on how much of their assets banks want to hold as reserves. not fixed but depends on interest rates. not fixed but is set by the Federal Reserve. equal to 2.

Answer 1

The money multiplier in the United States is not fixed but is set by the Federal Reserve.

What is the money multiplier?

It is a figure that measures the total amount of money that can be derived from a single deposit into the financial system.

It is set by the Fed though indirectly when the Fed sets the required reserve ratio. This is because the money multiplier is calculated as:

= 1 / required reserves

Find out more on the money multiplier at https://brainly.com/question/4412587.

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