10. Describe how each of the following can affect the money supply: (a) the central bank; (b) banks; and
11. “The money multiplier is necessarily greater than 1.” Is this statement true, false, or uncertain?
Explain your answer.
12. What effect might a financial panic have on the money multiplier and the money supply? Why?
13. During the Great Depression years from 1930 to 1933, both the currency ratio c and the excess
reserves ratio e rose dramatically in the United States. What effect did these factors have on the money
14. In October 2008, the Federal Reserve began paying interest on the amount of excess reserves held by
banks. How, if at all, might this affect the multiplier process and the money supply in the United States?