A Single Bank Is Limited in Its Ability to Create

question 110

Multiple Choice

A single bank is limited in its ability to create money because

• A)loan recipients usually take the proceeds of the loan in cash.
• B)the FDIC will not permit it to create money unless the loans are guaranteed by the federal government.
• C)the money loaned will probably be deposited in another bank.
• D)federal legislation prohibits banks from creating money except to finance international trade.

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Definitions:

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Sanity Review

An initial review to ensure the validity and logical soundness of a project, document, or coding before further development or analysis.

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