Question 24
MediumOriginal questionDeposit creation by banks is limited by
Show the answer and explanation
CorrectNot quiteAnswer D
Correct answer: D
Explanation
Each round, a share of the new deposit leaks into reserves, so the rounds shrink.
When all of the first deposit has ended up as reserves, creation stops.
- Concept
- Limit to deposit creation
- Typical timeTypical
- 70 s
- Your timeYours
- —
Practise this chapter →
Ten questions from Money Creation by Banks, at your own pace.