Explanation:

Money Multiplier is a phenomenon, in which the creation of money is done in the form of credit creations in the economy. In other words, a money multiplier can be described as the influence a central bank plays over the money supply by modifying the required reserve rates. Statement 1 is correct: The injection of funds or infusion of money into the banking system increases the money multiplier effect. Money multiplier is highly dependent upon the infusion of money as it is the ratio of the amount of money that is created in an economy to the amount of new money put into the banks. Statement 2 is incorrect: An increase in the banking habits of people will increase the money multiplier. The increase in banking habits leads to better credit culture in the economy leading to high monetary supply in the economy as compared to the injected highpowered money in the economy. A money multiplier can be used to demonstrate how much broad money commercial banks may issue for a given fixed base money quantity and reserve ratio. Statement 3 is correct: The money multiplier is inversely proportional to the reserve ratio. The cash reserve ratio, (CRR), is a variable quantity in the money multiplier formula. This implies that the money multiplier increases as CRR decreases. Alternately, as CRR increases, the money multiplier decreases, indicating a reduction in the amount of money available to the economy.