The greater the ________,the greater the extent to which the banking system can expand the money supply.
A) legal reserve requirements
B) amount of reserves the public removes from the banking system in form of cash
C) willingness of banks to hold excess reserves
D) reciprocal of the required ratio of reserves to deposits
E) number of independent banks in the system

Question

Quizplus · Accepted Answer

The reciprocal of the required ratio of reserves to deposits is known as the money multiplier. The higher the money multiplier, the greater the extent to which the banking system can expand the money supply.

The Greater the ________,The Greater the Extent to Which the Banking