A Fed publication refers to the multiple expansion of deposits as the heart of banking theory. a.

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A Fed publication refers to the multiple expansion of deposits as “the heart of banking theory.”
a. Why is the process of the multiple expansion of deposits important to understanding how the banking system operates?
b. The same publication contrasts “the banking system’s ability to multiply loans and deposits with the individual bank’s inability to do so.” How is the banking system able to multiply loans and deposits if an individual bank is unable to do so?

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Money Banking And The Financial System

ISBN: 1801

3rd Edition

Authors: R. Glenn Hubbard, Anthony Patrick O'Brien

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