Economics · Money and Banking
What does the term 'Money Multiplier' signify in macroeconomics?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The percentage increase in the wholesale price index over a financial year
- 2The mechanism through which commercial banks expand credit and overall money supply based on reserve money✓
- 3The absolute profitability ratios of commercial banking institutions
- 4The rate at which money changes hands in an economy
Correct answer
The mechanism through which commercial banks expand credit and overall money supply based on reserve money
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