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Which of the following will serve to reduce the effective demand deposit multiplier?
Banks initially loan out more money than permitted by the central bank.
All proceeds from demand deposits are redeposited into a customers bank.
There is excess demand for bank loans.
Banks maintain no excess reserves.
Individuals tend to keep, as cash, on average 10% of the proceeds from demand deposits paid to them. They do not redeposit the full amount of their proceeds.