We know how many dollars banks create using the:
A) money multiplier.
B) federal funds.
C) demand deposits.
D) interest rate.

Question

Quizplus · Accepted Answer

Banks create money through the money multiplier process, which is determined by the reserve ratio set by the Federal Reserve. As banks receive deposits, they are required to hold a portion in reserve but can lend out the rest. The money multiplier formula calculates the maximum amount of money that can be created through this lending process.

We Know How Many Dollars Banks Create Using The