Question: The basic reason why the commercial banking system can increase its demand deposits by a multiple of its free reserves is that: a . the

The basic reason why the commercial banking system can increase its demand deposits by a multiple of its free reserves is that:
a. the banking system must keep reserves equal to 100 percent of its demanddeposit liabilities
b. leakage into circulation occurs
c. the central banks follow policies which prevent reserves from falling below the level required by law
d. reserves lost by a particular bank will be gained by some other bank
e. banks hold excess reserves
The basic reason why the commercial banking

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