If the money multiplier is approximated to be 10, it means:
A) banks create 10 dollars in deposits from each original deposit of a dollar.
B) banks create approximately 10 times the amount of cash in the economy.
C) the economy overall has 10 times the amount of deposits as existing cash.
D) All of these are true.

Question

Quizplus · Accepted Answer

The money multiplier of 10 implies that banks can create 10 dollars in deposits for each dollar of reserves, leading to the economy having 10 times the amount of deposits as existing cash.

If the Money Multiplier Is Approximated to Be 10, It