The maximum change in the money supply due to an initial change in the excess reserves banks hold is called the:
A) fractional reserve banking system.
B) money multiplier.
C) required reserve ratio.
D) open market operations.

Question

Quizplus · Accepted Answer

The money multiplier is the maximum amount of money that can be created in the banking system due to an initial change in the reserve balances. It is determined by dividing the amount of money created by the initial change in reserves.

The Maximum Change in the Money Supply Due to an Initial