The Expansion of Deposits Resulting from an Injection of New

question 23

Multiple Choice

The expansion of deposits resulting from an injection of new cash to the banking system can be calculated as follows.The change in deposits is equal to

• A)the change in loans divided by the sum of the target reserve ratio.
• B)the change in reserves divided by the cash-deposit ratio.
• C)the change in reserves divided by the target reserve ratio.
• D)the change in reserves divided by the sum of the target reserve ratio and the cash-deposit ratio.
• E)the change in reserves divided by the sum of excess reserves and cash drain.

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