Suppose the currency-to-deposit ratio is 0.25, the excess reserve-to-deposit ratio is 0.04, and the required reserve ratio is 0.05. Which will have a larger impact on the money multiplier: a rise of 0.05 in the currency ratio or in the excess reserves ratio?
Instructions: Please round your answers to the nearest hundredth (2 decimal places).
Initially, the money multiplier is m = .
If the currency-to-deposit ratio rises to 0.3, the multiplier falls to m = .
If, instead, the excess reserve-to-deposit ratio rises, the multiplier will be m = .
So, multiplier falls by more with the increase in the (Click to select) excess reserve ratiocurrency ratio.