The multiple by which the commercial banking system can expand the money supply on the basis of excess reserves is: zero. larger the smaller the legal reserve ratio. the reciprocal of the bank's sterling reserves. smaller than the legal reserve ratio.

The supply of money is determined by the central bank of the country. The tools of money supply are…

Answered: The multiple by which the commercial…

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter12: Money, Banking And The Financial System

Section12.3: How Banking Developed

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The multiple by which the commercial banking system can expand the money supply on the basis of excess reserves is:

		zero.
		larger the smaller the legal reserve ratio.
		the reciprocal of the bank's sterling reserves.
		smaller than the legal reserve ratio.

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

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