Author Question: If people never withdrew money, how much money could the banking system create given a new amount of ... (Read 109 times)

codyclark · **on:** Jun 30, 2018

If people never withdrew money, how much money could the banking system create given a new amount of deposits, assuming that excess reserves were zero?

A) the amount of new deposits multiplied by the money multiplier
B) as much as the new deposits
C) zero
D) the amount of new deposits multiplied by the reserve ratio

Question 2

Refer to the scenario above. The increase in output due to a one-unit increase in capital is smallest at point ________.

A) A B) B C) C D) D