The money multiplier yielded by the deposit-creation formula assumes that
A)banks hold no excess reserves.
B)banks hold excess reserves.
C)recipients of loans take some of the proceeds in cash.
D)recipients of loans do not redeposit their funds in other banks.

Question

Quizplus · Accepted Answer

The money multiplier concept assumes that banks hold no excess reserves, meaning all available funds are loaned out or invested, maximizing the potential for deposit creation through the banking system.

The Money Multiplier Yielded by the Deposit-Creation Formula Assumes That