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What is the other name of the money multiplier?
Credit Multiplier
Deposit Multiplier
Cash Reserve Ratio
a and b both
- Credit Multiplier: This term is sometimes used interchangeably with the money multiplier because both refer to the process by which banks create new loans, thereby increasing the total money supply in the economy.
- Deposit Multiplier: This is another name for the money multiplier. It specifically highlights how initial deposits can lead to a larger total supply of money through the banking system.
- Cash Reserve Ratio: This is the percentage of total deposits that banks must keep in reserve and not lend out. It influences the money multiplier but is not another name for it.
- Correct Answer:
- Option 4: a and b both
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