The money-creation process generated by an injection of reserves stops when
A)people deposit their loans into other banks.
B)reserve requirements are raised.
C)the increase in required reserves equals the size of the injection.
D)bankers begin to fear runs and stop making loans.

Question

Quizplus · Accepted Answer

When the increase in required reserves equals the size of the injection, the banks are no longer able to create more money through loans as they need to keep enough reserves to meet the new requirements. This stops the money creation process.

The Money-Creation Process Generated by an Injection of Reserves Stops