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23 May, 07:13

During the Christmas season, people tend to draw money out of their checking accounts to pay for presents. As a result, the money multiplier will: become more volatile. not change. decrease. increase.

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  1. 23 May, 07:28
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    Answer: decrease

    Explanation:

    The money multiplier is the amount of money generated by banks with each dollar of reserves. The reserves is the amount of deposits which the Federal Reserve wants banks not to lend but rather hold. The money multiplier is therefore the ratio of deposits to the reserves in the banking system.

    The money multiplier shows the ratio of the increase or decrease in money supply in relation to the increase or decrease in deposits. During the Christmas period, people draw lots of money out of their accounts to buy presents and other things. This will lead to a decrease in the money multiplier.
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