Which of the following will make the real-world money multiplier ...

[CharlieWard]

Which of the following will make the real-world money multiplier smaller than the theoretical formula?
 a. Banks actually hold fewer reserves than technically required by the Fed.
  b. Banks actually make loans for more money than they have in excess reserves.
  c. Banks may keep some excess reserves rather than loan it all out.
  d. Both a. and b. above are correct.

Question 2

Assume that the Paris First National Bank's loan position contracted from 16 million to 12 million. If the required reserve ratio was increased from 20 percent to 40 percent, how much would the money supply shrink?
 a. 5 million.
  b. 10 million.
  c. 15 million.
  d. 20 million.
  e. 24 million.

[Pamela.irrgang@yahoo.com]

Answer to Question 1

c

Answer to Question 2

d

[CharlieWard]

Thank you

[Pamela.irrgang@yahoo.com]

Happy to help you