If all banks are loaned up and so will not make further loans, a $1,000 deposit creates $1,000 in new money.

Name: If all banks are loaned up and so will not make further loans, a $1,000 deposit creates $1,000 in new money.
Brand: Quizplus
Rating: 4.8 (45 reviews)

Question

Quizplus · Accepted Answer

A $1,000 deposit does not create $1,000 in new money if banks are loaned up, as they cannot lend out any portion of the deposit to create additional money through the money multiplier effect.

If All Banks Are Loaned Up and So Will Not