The statement is True. The money multiplier is necessarily greater than 1.
The money multiplier is the primary can used to calculate what trade-in reserves may want to do to the money deliver. The system for the money multiplier is 1/r wherein r is the reserve ratio. as soon as one has calculated the money multiplier, they might then multiply that through the exchange in reserves.
The money multiplier is a term in economic economics that may be a phenomenon of creating money in the economy inside the form of credit score advent, that is based on the fractional reserve banking device. the money multiplier is likewise known as the economic multiplier.
In monetary economics, a money multiplier is one in all various closely associated ratios of commercial bank cash to crucial financial institution cash under a fractional-reserve banking device. It pertains to the maximum quantity of business financial institution money that may be created, given a sure amount of central financial institution cash.
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