When a bank makes loans with excess reserves, it

Name: When a bank makes loans with excess reserves, it
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When a bank makes loans with excess reserves, it creates money by increasing the overall money supply. This is known as the money multiplier effect, where a small increase in the money supply through lending leads to a larger increase in the overall money supply as the borrowed funds are deposited in other banks and are also lent out.

When a Bank Makes Loans with Excess Reserves, It