Do Bankers Create Money

question 20

Multiple Choice

Do bankers create money?

• A)No, they cannot do this as private businesses.
• B)No, they are prevented by federal law.
• C)Yes, through multiple deposit creation.
• D)Yes, by opening checking accounts for customers.

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Definitions:

Credit Policy

Guidelines a company utilizes to determine to whom to extend credit and under what terms, impacting its risk and customer relations.

Bad Debt Expense

An expense reported on the income statement, reflecting the cost of accounts receivable that a company does not expect to collect due to customer defaults.

Allowance for Doubtful Accounts

A contra-asset account that represents an estimate of accounts receivable that may not be collected.

Percentage of Sales Basis

A method used to forecast future financial outcomes by assuming that certain expenses, net income, and balance sheet items change in direct proportion to changes in sales.