The multiple by which the commercial banking system can expand the supply of money is equal to:. a. the MPS.
b. its actual reserves.
c. its excess reserves.
d. the reserve ratio.

The Reciprocal of the Reserve Ratio

Explanation:

Answer does not seem to be listed however Banks wield the power to expand money supply by multiplying deposits with the reciprocal of the Reserve Ratio.

After banks have set aside the amount they are told to by the Central Bank, the remaining deposits they have can be loaned out. The amount that these deposits can create in the Economy is equal to those deposits multiplied by 1/Reserve Ratio. This is called the MONEY MULTIPLIER.

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