Banks create money by aLending out part of their deposits bIssuing debit cards cAccepting checks
Question
Solution 1
Banks create money primarily through the first option, lending out part of their deposits. Here's a step-by-step explanation:
-
When a bank receives deposits, it keeps a certain percentage (known as the reserve ratio) in reserve and lends out the rest.
-
The money lent out is then deposited by Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI is a powerful AI-powered study tool designed to help you to solve study problem.
Knowee AI
Similar Questions
What is the money in the form of currency and checkable deposits in commercial banks called?Multiple choice question.M1S1S2GDP
Which among the following entities other than banks is/are permitted by RBI to accept deposits and lend money? a. Co-operative Credit Societies b. NBFC
A coffee shop that collects payments from customers by debit / credit cards would be liable under the data privacy lawGroup of answer choicesTrueFalse
The requirement is the fraction of checkable deposits that banks must keep on hand as reserves either as currency or on deposit with the Federal Reserve.
Each of 18 cards is numbered with either a 4 or a 5. It turns out that the sum of all the numbers is divisible by 17. How many cards are labeled with a 4?
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.