Question

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 monetary multiplier, then:__________.

Answer 1

The answer is D = E×M

Step-by-step explanation:

The amount of excess reserves multiplied by the monetary multiplier would amount to 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.