Which of the Following Best Describes How Banks Create Money

question 33

Multiple Choice

Which of the following best describes how banks create money?

• A)Banks charge higher interest rates on loans than they pay on deposits.
• B)Banks charge fees for providing financial advice.
• C)Banks create checking account deposits when making loans from excess reserves.
• D)Banks make loans from reserves.

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Definitions:

Ammeter

An instrument used to measure the current in a circuit, expressed in amperes.

Current Flow

The movement of electric charge carriers, such as electrons, through a conductor or space.

Load

An electrical component or portion of a circuit that consumes electric power.

AC

Alternating Current, a type of electrical current in which the direction of the flow of electrons switches back and forth at regular intervals or cycles.