We know how many dollars banks create using the:
A) money multiplier.
B) federal funds rate.
C) demand deposit ratio.
D) interest rate.

Question

Quizplus · Accepted Answer

Banks create money using the money multiplier, which is based on the reserve requirement set by the Federal Reserve. When a bank receives a deposit, it sets aside a portion as reserves and can lend out the rest. The money multiplier allows us to calculate how much money banks can create based on their reserves.

We Know How Many Dollars Banks Create Using The