When New Checkable Deposits Are Created Through Loans

question 27

Multiple Choice

When new checkable deposits are created through loans,

• A) the money supply contracts.
• B) excess reserves are destroyed.
• C) the money supply remains the same.
• D) the money supply expands.
• E) the required reserve ratio declines

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Definitions:

Equitable Assignment

The transfer of future rights to benefits in a contract to another party, recognized by equity courts.

Novation

The process of replacing an existing obligation with a new one, effectively transferring the rights and duties to another party.

Breach of Contract

The act of not executing any part of a contract, either written or oral, lacking a legitimate legal rationale.

Non Est Factum

A legal defense claiming a person signed a document without understanding its nature due to a fundamental mistake.