If We Assume M to Be Equal to the Maximum

question 103

Multiple Choice

If we assume m to be equal to the maximum amount of dollar that can be created from a single dollar of excess reserves and R to be equal to the desired reserve ratio, then we can say that for the banking system:

• A)m = R - 1.
• B)R = m/1.
• C)R = m - 1.
• D)m = 1/R.

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