The reason why the banking system can increase checkable deposits by a multiple of initial deposits is that:
A) the banking system must keep reserves equal to 100 percent of its checkable deposits.
B) the central bank follows policies that prevent reserves from falling below the level required by law.
C) reserves lost by any particular bank are gained by the Federal Reserve Bank.
D) borrowers often spend most of a loan which is then deposited.
Correct Answer:
Verified
Q123: The amount of money ultimately created per
Q124: Real assets are created by:
A)government intervention.
B)real economic
Q125: Suppose the banking system has $100,000 in
Q126: Suppose the required reserve ratio is 0.15.
Q127: Excess reserves equal:
A)total deposits.
B)total deposits minus required
Q129: Given a required reserve ratio of 20
Q130: Given a required reserve ratio of 10
Q131: If people hold onto money as cash
Q132: Suppose the banking system has $100,000 in
Q133: The amount of reserves in the economy
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents