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Ravneet Singh
on Nov 11, 2024

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The money expansion process continues until there are no more:

A) required reserves in the system.
B) demand deposits in the system.
C) excess reserves in the system that banks are willing to lend.
D) liabilities in the system.
E) assets in the system.

Excess Reserves

are bank reserves held in excess of what is required by the central bank, which can be lent out to earn interest.

Money Expansion Process

The increase in the total amount of money in circulation or in the money supply, facilitated by mechanisms such as lower interest rates or quantitative easing.

Demand Deposits

Bank account balances that can be accessed and withdrawn by the depositor at any time without advance notice.

  • Identify the distinctions between excess reserves and obligatory reserves, and their role in influencing the supply of money.
  • Gain insight into the role that commercial banks play in the proliferation of money by way of loans and deposits.
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David VanDykeNov 13, 2024
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