Asked by
Justine Puntual
on Oct 13, 2024
Verified
Banks create money when they
A) add to their reserves in the Federal Reserve Bank.
B) accept deposits of cash.
C) sell government bonds.
D) exchange demand deposits for loans to businesses and individuals.
Demand Deposits
Bank accounts that allow the holder to withdraw funds without advance notice, often used for day-to-day expenses.
Federal Reserve Bank
One of the 12 regional banks of the Federal Reserve System, each serving a specific geographic area of the United States, involved in banking and monetary policy.
- Understand how banks create money through the process of making loans.
Verified Answer
DB
Learning Objectives
- Understand how banks create money through the process of making loans.