Multiple Choice
In a fractional-reserve banking system, banks create money because:
A) each dollar of reserves generates many dollars of demand deposits.
B) banks have the legal authority to issue new currency.
C) funds are transferred from households wishing to save to firms wishing to borrow.
D) the wealth of the economy expands when borrowers undertake new debt obligations.
Correct Answer:
Verified
Correct Answer:
Verified
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