The Quantity of Money That the Banking System Can Create

question 126

Multiple Choice

The quantity of money that the banking system can create is limited by

• A)bank managers' decisions.
• B)the monetary base, desired reserves, and desired currency holdings.
• C)the number of consumers who apply for loans.
• D)the credit ratings of the consumers who are applying for loans.
• E)the quantity of bank notes released by the Bank of Canada.

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Definitions:

ASIC

The Australian Securities and Investments Commission, which acts as the financial services and markets regulator in Australia.

Insolvency

The state of being unable to pay debts owed when they are due, leading to potential bankruptcy.

Corporations Act

The Corporations Act 2001 is Australian Commonwealth legislation that covers many aspects of the operations of Australian companies, including requiring certain types of entities to prepare financial statements.

Winding Up

The process of dissolving a company, where its assets are liquidated to pay off creditors, and any remaining assets are distributed among shareholders.