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:

Free Trade

The absence of artificial (government) barriers to trade among individuals and firms in different nations.

Economic Inefficiency

A situation where resources are not allocated optimally, leading to waste or loss in the potential value of output.

Hollow Corporation

A business model where a company outsources most of its production processes, keeping only core functions such as design, marketing, and branding in-house.

Imports Foreign Goods

The act of bringing goods and services from foreign countries into one's own country for sale.