The money multiplier effect shows that when a bank has a lower reserve rate, they are able to generate money

The money multiplier effect shows that when a bank has a lower reserve rate, they are able to generate more money.

Explanation:

The monetary multiplier effect corresponds to the relationship between the supply of money and the monetary base existing at a given moment in the economic system. It translates banks' ability to expand the monetary base through credit, generating more money.

In this way, we conclude that when the bank has a lower interest rate, more people will be looking for that bank. In turn, the bank will generate more money.

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