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Money Creation by Banks · Question 24 of 58

Question 24

MediumOriginal question

Deposit creation by banks is limited by

Options for question 24

Show the answer and explanation
CorrectNot quiteAnswer D

Correct answer: D

Explanation

  1. Each round, a share of the new deposit leaks into reserves, so the rounds shrink.

  2. When all of the first deposit has ended up as reserves, creation stops.

Concept
Limit to deposit creation
Typical time
70 s
Your time
—
The rule this testsDeposit creation, round by round
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Ten questions from Money Creation by Banks, at your own pace.

Practise this chapter →

Ten questions from Money Creation by Banks, at your own pace.