Under Which of the Following Circumstances Will the Simple Money

Multiple Choice

Under which of the following circumstances will the simple money multiplier most overstate the change in checkable deposits arising from a change in excess reserves?

A) The public withdraws no cash and banks hold no excess reserves.
B) The public withdraws no cash and banks hold excess reserves.
C) The public withdraws cash and banks hold no excess reserves.
D) The public withdraws cash and banks hold excess reserves.
E) The required reserve ratio equals 1.