Question

Which of the following statements is/are correct about money supply?
a. An increase in the bank’s demand deposit will result in a decrease in the required
cash reserves.
b. The quantity of money supplied in the economy is a flow concept.
c. A decrease in the required reserve ratio will cause an increase in the credit multiplier

Answer 1

A decrease in the required reserve ratio will cause an increase in the credit multiplier is a correct statement, so the correct answer is C.