A bank cannot create money unless its
A) required reserves are greater than actual reserves.
B) excess reserves are zero.
C) desired reserves are less than actual reserves.
D) excess reserves equal deposits multiplied by the reserve ratio.

Question

Quizplus · Accepted Answer

A bank can create money (through lending) when its actual reserves exceed its desired (or required) reserves, because it then has excess reserves available to lend out.

A Bank Cannot Create Money Unless Its