Money expansion stops when new reserves introduced into the banking system have been converted into:

Question

Quizplus · Accepted Answer

When new reserves are introduced into the banking system, banks are required to hold a certain percentage of those reserves as required reserves. Once the banks have fulfilled this requirement, any remaining reserves can be loaned out, resulting in a multiplication effect and expansion of the money supply. However, once all new reserves have been converted into required reserves, there is no further potential for money expansion.

Money Expansion Stops When New Reserves Introduced into the Banking