If Tucker National Bank has $10,000 in excess reserves that it cannot lend:
A) the money multiplier increases.
B) the money multiplier decreases.
C) the money multiplier stays the same.
D) checkable deposits increase.

Question

If Tucker National Bank has $10,000 in excess reserves that it  cannot lend:
A) the money multiplier increases.
B) the money multiplier decreases.
C) the money multiplier stays the same.
D) checkable deposits increase.

Quizplus · Accepted Answer

Excess reserves cannot be lent out, so if Tucker National Bank has $10,000 in excess reserves, it cannot be used to create new loans and thus the money multiplier decreases.

If Tucker National Bank Has $10,000 in Excess Reserves That