APFIVE Role of Excess Reserves in Money Creation
In the context of fractional reserve banking, what is the role of excess reserves in the money creation process?
A
They decrease the money multiplier by limiting the amount of loanable funds
B
They are mandatory holdings that banks must maintain to meet regulatory requirements
C
They represent the potential for additional money creation beyond required reserves
D
They are used to calculate the velocity of money in the economy
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