Banks cannot influence the money supply if they are required to hold all deposits in reserve.

Name: Banks cannot influence the money supply if they are required to hold all deposits in reserve.
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Question

Quizplus · Accepted Answer

If banks are required to hold all deposits in reserve, they cannot lend out any money, thus they cannot create additional money through the lending process, which is a primary way banks influence the money supply.

Banks Cannot Influence the Money Supply If They Are Required