Which of the following does NOT explain why the actual money multiplier and the potential money multiplier are different?
A) Banks hold excess reserves during tough economic times.
B) The interest rate that banks pay on deposits is very low.
C) Foreign deposits in American banks aren't counted in the actual money multiplier.
D) Foreign consumers,businesses,and governments hold U.S.dollars.

Question

Quizplus · Accepted Answer

Foreign deposits in American banks aren't counted in the actual money multiplier, but this does not explain the difference between the actual and potential money multiplier. The actual money multiplier is affected by factors like banks holding excess reserves and the public's preference for holding cash, not foreign deposits.

Which of the Following Does NOT Explain Why the Actual