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

question 31

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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