In the simple model of multiple deposit creation in which banks do not hold excess reserves,the increase in checkable deposits equals the product of the change in excess reserves and the

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The simple deposit expansion multiplier determines the amount of multiple deposit creation that can occur in the banking system. In this simple model, banks do not hold excess reserves, so the entire change in excess reserves can be used to create new checkable deposits. Therefore, the increase in checkable deposits equals the change in excess reserves multiplied by the simple deposit expansion multiplier.

In the Simple Model of Multiple Deposit Creation in Which