The multiple expansion or contraction of the money supply in commercial banks depends upon:

Question

Quizplus · Accepted Answer

The multiple expansion or contraction of the money supply in commercial banks depends on all these factors: depositors not withdrawing all their funds at once, banks not holding onto excess reserves more than necessary, and banks being willing to hold only a fraction of their deposits as cash reserves. These conditions allow banks to lend out most of the deposits they receive, creating a multiplier effect on the money supply.

The Multiple Expansion or Contraction of the Money Supply in Commercial