If D Equals the Maximum Amount of New Demand-Deposit Money

question 206

Multiple Choice

If D equals the maximum amount of new demand-deposit money that can be created by the banking system on the basis of any given amount of excess reserves; E equals the amount of excess reserves; and m is the money multiplier, then we can say that:

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

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