The dollar volume of deposits that the banking system can create for each new dollar of excess legal reserves injected into the banking system is known as the deposit multiplier.

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The deposit multiplier is a concept in banking and monetary economics that quantifies the maximum amount of bank deposits that can be created in the banking system from a given amount of excess reserves. It is based on the reserve requirement ratio set by the central bank, indicating how many dollars in deposits can be generated from each dollar of excess reserves.

The Dollar Volume of Deposits That the Banking System Can