The Banking System Creates Money in the Sense That It

question 5

Multiple Choice

The banking system creates money in the sense that it:

• A)prints money.
• B)creates excess reserves from loans.
• C)creates loans from excess reserves.
• D)creates required reserves from loans.
• E)creates loans from required reserves.

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Definitions:

Self-Sufficiency

The ability to fulfill all of one's needs without external assistance.

Merchandise Trade Balance

The difference between a country's exports and imports of tangible goods.

Services Trade Balance

The difference between exports and imports of services of a country, reflecting whether a country is a net provider or consumer of services internationally.

Adam Smith

An 18th-century economist known as the father of modern economics, famous for his theories on free markets and the 'invisible hand'.