Question

Recently many large commercial and retail banks have been choosing to increase the amount of excess reserves they hold in the Federal Reserve, and this has caused an increase in the money multiplier and the money supply.
a. True
b. False

Answer 1

Answer:

A. True

Explanation:

Large commercial and retail banks have been choosing to increase the amount of excess reserves they hold in the Federal Reserve, and this has caused an increase in the money multiplier and the money supply.

This is true as an increase in the Federal reserves would lead to increased room for loan and lending facilities which would also help increase the money supply of the populace.