Asked by
Jazzmine Aigle
on Oct 13, 2024
Verified
The goldsmith's ability to create money was based on the fact that
A) withdrawals of gold tended to exceed deposits of gold in any given time period.
B) consumers and merchants preferred to use gold for transactions,rather than paper money.
C) the goldsmith was required to keep 100 percent gold reserves.
D) paper money was rarely redeemed for gold.
Gold Reserves
The amount of gold held by a central bank or government to support the value of its currency and to settle debts or engage in trade.
Create Money
The process by which the central bank or financial institutions increase the money supply in the economy, typically through activities such as lending or purchasing government securities.
- Understand the principle of bank reserves and how the fractional reserve banking system operates.
Verified Answer
JE
Learning Objectives
- Understand the principle of bank reserves and how the fractional reserve banking system operates.
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