Banks

question 186

Multiple Choice

Banks

• A) cannot create money.
• B) create money by making loans using the deposits of their customers.
• C) create money by printing it.
• D) create money by getting currency from the U.S. Bureau of Engraving and Printing and handing it out to favored clients.

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Definitions:

Annual Interest Rate

The percentage increase in money per year, including compounding, that an investment or loan grows.

Decimal Places

The number of digits to the right of the decimal point in a decimal number, indicating its precision.

Compounded Daily

A method of calculating interest where the interest earned is added to the principal daily, resulting in earning interest on interest.

Effective Yield

A measure of the return on an investment, considering the compound interest rate.