The money multiplier in an economy refers to the amount of money that is created in the economy as a result of each unit of the base money created by the central bank. It is affected by various factors including the cash reserve ratio (CRR), the statutory liquidity ratio (SLR), and the banking habit of the population.
The cash reserve ratio (CRR) is the percentage of deposits that banks are required to keep with the central bank as a reserve. If the CRR is increased, the amount of funds available with banks for lending decreases, which in turn reduces the money multiplier.
The statutory liquidity ratio (SLR) is the percentage of deposits that banks are required to invest in specified securities like government bonds. If the SLR is increased, banks have less funds available for lending, which reduces the money multiplier.
The banking habit of the population can also affect the money multiplier. If more people use banks for transactions and savings, the banks will have more deposits and more funds for lending, which increases the money multiplier.
Therefore, the correct answer is option B - Increase in the banking habit of the population.