Banks Create Money When They

question 241

Multiple Choice

Banks create money when they

• A)add to their reserves in the Federal Reserve Bank.
• B)accept deposits of cash.
• C)sell government bonds.
• D)exchange demand deposits for loans to businesses and individuals.

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Definitions:

Natural Monopoly

A market condition where a single firm can supply a product or service to an entire market at a lower cost than what two or more firms could achieve, often due to high fixed or barrier costs.

Compliance Costs

Expenses incurred by businesses and organizations in adhering to regulations, laws, guidelines, and standards, including the costs of implementing necessary changes.

Industrial Regulation

Involves government policies and rules aimed at regulating the activities and standards of specific industries to protect public interest.

Average Total Cost

The total cost of production divided by the quantity produced, representing the cost per unit of output.