Question

The money supply will grow faster through deposit creation when the required reserve ratio is: a. high and banks hold excess reserves. b. low and banks are able to lend out all of their excess reserves. c. low and banks are unable to loan out all of their excess reserves. d. high and banks cannot find good customers to lend to.

Answer 1

Answer:

c. low and banks are unable to loan out all of their excess reserves. d

Explanation:

Lower required reserve ratio means banks have more money to lend. When banks are able to lend all its excess money, then money supply increases for citizens.