In the special case of the 100-percent-reserve banking, the money multiplier is

A) 1 and banks create money.
B) 1 and banks do not create money.
C) 2 and banks create money
D) 2 and banks do not create money.

Money Multiplier

The ratio of the change in the total money supply to the change in the monetary base, indicating how an initial deposit can lead to a greater final increase in the total money supply.

Reserve Banking

A banking system in which banks hold a fraction of their deposits as reserves, enabling them to meet withdrawal demands and extend credits.

Create Money

The process by which the central bank of a country (or other monetary authority) increases the money supply, often leading to the production of physical money or the creation of digital currency units.