Macroeconomics

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Reducing Effective Demand Deposit Multiplier

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Which of the following will serve to reduce the effective demand deposit multiplier?

A

Banks initially loan out more money than permitted by the central bank.

B

All proceeds from demand deposits are redeposited into a customers bank.

C

There is excess demand for bank loans.

D

Banks maintain no excess reserves.

E

Individuals tend to keep, as cash, on average 10% of the proceeds from demand deposits paid to them. They do not redeposit the full amount of their proceeds.