The money supply will grow faster through deposit creation when the required reserve ratio is:

Question

Quizplus · Accepted Answer

When the required reserve ratio is low and banks are able to lend out all of their excess reserves, they can create more loans and deposit money, which leads to faster growth of the money supply. If the required reserve ratio is high, banks will hold back their excess reserves and not lend out as much, slowing the growth of the money supply. If banks cannot find good customers to lend to, it limits their ability to create new loans and deposit money. If banks are unable to loan out all of their excess reserves, it means there is not enough demand for loans, which also limits their ability to create new deposits and grow the money supply.

The Money Supply Will Grow Faster Through Deposit Creation When