The ratio of money created by the lending activities of the banking system to the money created by the government's central bank is called the:
A) money multiplier.
B) reserve ratio.
C) federal funds.
D) demand deposits.

Question

Quizplus · Accepted Answer

The ratio of money created by the lending activities of the banking system to the money created by the government's central bank is known as the money multiplier. The money multiplier reflects the extent to which banks can expand the supply of money beyond the amount determined by the central bank's monetary policy.

The Ratio of Money Created by the Lending Activities of the Banking