If a banking transaction created new excess reserves in the banking system,what would the impact be on the amount of loans made by banks and the money supply?

Question

Quizplus · Accepted Answer

When a banking transaction creates new excess reserves in the banking system, banks have more funds available to lend out. This leads to an increase in the amount of loans made by banks, which in turn increases the money supply. Therefore, option B is the correct answer.

If a Banking Transaction Created New Excess Reserves in the Banking