If banks receive a greater amount of currency and do not hold all of this new currency as reserves, the money supply expands.

Question

Quizplus · Accepted Answer

When banks receive more currency and do not hold it all as reserves, they have more money available to lend out to borrowers, which can lead to an increase in the money supply as more loans result in more money in circulation. This is known as the money multiplier effect.

If Banks Receive a Greater Amount of Currency and Do