When banks hold excess reserves, the size of the money multiplier becomes infinite. Option D is correct.
What is a money multiplier?
A money multiplier is one of several closely linked proportions of commercial bank money to central bank money.
Considering some certain amount of central bank money, it refers to the maximum amount of commercial bank money that can be created.
The size of these multipliers becomes infinite, when the banks hold excess reserves, and if the reserve-deposit ratio is more than one the money multiplier would be less than one, and vise versa.
Therefore, option D is correct.
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