Why is the money multiplier smaller than the simple deposit multiplier

Why is the money multiplier smaller than the simple deposit multiplier?

What will be an ideal response?

 

ANSWER

In the case of the money multiplier, individuals may hold some of their assets in cash rather than depositing them in a checking account and banks may hold excess reserves. The simple deposit multiplier assumes all assets are deposited into banks and banks do not hold excess reserves.

Expert paper writers are just a few clicks away

Place an order in 3 easy steps. Takes less than 5 mins.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00