The key to understanding the money creation process is the fact that:
A. since the money supply excludes cash but includes checking account deposits, money is created whenever individuals deposit cash into a checking account.
B. whenever banks create financial assets for themselves, they create financial liabilities for individuals, and those financial liabilities are considered money.
C. whenever banks create financial liabilities for themselves, they create financial assets for individuals, and those financial assets are considered money.
D. banks are able to print dollar bills and add these to circulation whenever they extend loans.
Answer: C
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What will be an ideal response?
The business cycle component of the log of real per-capita GNP is equal to
A) log of actual real GNP - log of trend GNP. B) log of trend GNP ÷ log of actual real GNP. C) log of trend GNP - log of actual real GNP. D) log of actual real GNP ÷ log of trend GNP.
In Munn v. Illinois (1877), the Supreme Court held that:
a. state laws limiting prices charged by grain elevators were a violation of the Fifth Amendment. b. grain elevator and freight prices could only be regulated by the federal government. c. states have a right to regulate businesses within the state that are "clothed with a public interest.". d. organizations like the Grangers violated federal conspiracy laws.
If U.S. exports are $150 billion and U.S. imports are $100 billion, which of the following is correct?
a. The U.S. has a trade surplus of $100 billion. b. The U.S. has a trade surplus of $50 billion. c. The U.S. has a trade deficit of $100 billion. d. The U.S. has a trade deficit of $50 billion.