The power of a bank to create credit is affected by ?
Correct answer: D. A and B of above
- A. The cash reserve requirement
- B. The amount of cash available
- C. The number of branches of a bank
- D. A and B of above
Explanation
Credit creation depends on both the reserve requirement, which limits the deposit multiplier, and the cash or reserves available to the bank. Therefore, both statements A and B are relevant.
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