The money multiplier in an economy increases with which one of the following?

The money multiplier increases with the banking habit of the population because higher deposits provide banks with more loanable funds, facilitating greater credit creation through the fractional reserve system. In contrast, increasing the Cash Reserve Ratio (CRR) or Statutory Liquidity Ratio (SLR) decreases the multiplier by forcing banks to lock away more funds as reserves, thereby limiting their lending capacity. This concept tests the inverse relationship between reserve requirements and the total money supply generated from the monetary base.