Which of the following statements is correcta in the, Ask an Expert

Economics

Which of the following statements is correct?

a. In the special case of 100-percent-reserve banking, the reserve ratio is 1, the money multiplier is 2, and banks create money.

b. In the special case of 100-percent-reserve banking, the reserve ratio is 1, the money multiplier is 1, and banks do not create money.

c. When the reserve ratio is 0.5, then the money multiplier is 1 and banks do not create money.

d. When the reserve ratio is 0.125, then the money multiplier is 8, and each bank loans $8 for every $1 that it accept in deposits.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91672038

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