The money creation formula is oversimplified because it assumes that
A)every recipient of a bank loan will redeposit the proceeds in another bank.
B)loan recipients will not take any of the proceeds in cash.
C)every bank lends out all excess reserves.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

The money creation formula is oversimplified because it assumes that all loan recipients redeposit the proceeds, do not take cash, and that banks lend out all excess reserves, which may not happen in reality.

The Money Creation Formula Is Oversimplified Because It Assumes That