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Sheenlee Bagangan
on Nov 11, 2024

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Money expansion stops when new reserves introduced into the banking system have been converted into:

A) excess reserves.
B) securities.
C) deposits.
D) required reserves.
E) loans.

Money Expansion

An increase in the total supply of money in circulation within an economy, typically achieved through central bank operations.

Excess Reserves

Funds that banks hold over and above the legal requirement set by the central bank or banking regulator.

New Reserves

Additional funds or assets that financial institutions or countries set aside to meet future liabilities or unforeseen needs.

  • Contrast the ideas of excess reserves against required reserves and understand their impact on the money supply.
  • Understand the role of commercial banks in the money expansion process through loans and deposits.
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Edson CedenoNov 12, 2024
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