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Multiplier Effect

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Multiplier Effect
A measure of the change in a country's money supply that occurs as the result of banks' ability to lend. The multiplier effect is dependent on banks' required reserves, or the amount of money in deposits they are legally required to keep in-house. If a bank has a low reserve requirement, it is able to lend more of its deposit money, which in turn increases the money supply. This indicates a high multiplier effect. On the other hand, a high reserve requirement leads to a low multiplier effect. See also: M1, M2.


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In this town, about 10% of the population is drawing a paycheck from the state, so if you impair that base, and add the multiplier effect, this would have a very Draconian effect on the Sacramento economy.
In a time when increasing the multiplier effect of basic spending is desirable, decreasing the take-home pay of millions of workers is clearly counterproductive.
Anil Ahuja, Managing Director, India, 3i, Singapore, while highlighting India's progress in infrastructure development, spoke about the multiplier effect that the sector has on the economy.
 
 
 
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