Which of the following represents the lending capacity of an entire banking system?

Question

Quizplus · Accepted Answer

The lending capacity of an entire banking system is determined by the excess reserves, which is equal to the total reserves minus the required reserves. This excess reserves multiplied by the money multiplier (which determines the amount of new money that can be created from each dollar of excess reserves) represents the lending capacity of the banking system. Therefore, the correct formula is (Total reserves - required reserves) × money multiplier, making choice C the correct answer.

Which of the Following Represents the Lending Capacity of an Entire