Suppose the m1 multiplier is currently 195 and the m2, Ask an Expert

Finance

Suppose the M1 multiplier is currently 1.95 and the M2 multiplier is currently 8.03. If banks decide to decrease the ratio of required clearing balances they hold relative to the amount of transactions deposits they hold, the M1 multiplier will ____ and the M2 multiplier will ____.

a. not change; decrease

b. increase; increase

c. decrease; decrease

d. increase; not change

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92095010

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