What happens to the value of the deposit multiplier when banks hold excess reserves?
A) It is larger than the value implied by the formula.
B) It is smaller than the value implied by the formula.
C) It is only affected by the amount of loans that banks are willing to make, not the amount of excess reserves held.
D) There is insufficient information to answer the question.
Answer: B) It is smaller than the value implied by the formula.
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A) can influence the price that it charges B) produces as much as it can C) is a price taker D) faces a perfectly inelastic demand for its product
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