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100 Points - AP Macro Questions - Brainliest to Correct Answers. Wrong Answers Get Reported

What are two reasons that the money supply will not increase by as much as the multiplier effect states it will in the banking system.

Sagot :

Answer:

Explanation:

The money supply multiplier is how much an injection of money supply, e.g. the Federal Reserve Bank lowering the reserve requirement or changing the interest rates for banks, will increase and multiply the overall money supply in the economy.

Its actual effect is always less because banks hold extra reserves and people keep some money in cash instead of depositing into the bank.

Answer:

c & d

Explanation:

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