Westonci.ca connects you with experts who provide insightful answers to your questions. Join us today and start learning! Get quick and reliable solutions to your questions from a community of seasoned experts on our user-friendly platform. Discover detailed answers to your questions from a wide network of experts on our comprehensive Q&A platform.
Sagot :
Option a is correct. The money multiplier enables calculation of the maximum amount of money that can be created from a dollar deposited into the banking system.
The maximum amount of money that a bank can generate is determined by the money multiplier. The money multiplier measures how much the amount of money will vary if the monetary base changes.
The total amount of reserves held by a bank rises with each dollar deposited into an account. The bank will lend out the extra reserves while keeping some of the necessary reserves on hand. The money supply is increased when such loan is made.
Banks "generate" money in this way to expand the available supply. The money supply grows when a bank makes loans using surplus reserves. Using the money multiplier, we can anticipate the largest change in the money supply.
Know more about money multiplier here:
https://brainly.com/question/14986591
#SPJ4
Thanks for using our service. We're always here to provide accurate and up-to-date answers to all your queries. Thanks for stopping by. We strive to provide the best answers for all your questions. See you again soon. Find reliable answers at Westonci.ca. Visit us again for the latest updates and expert advice.
