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:

Attitude

An acquired inclination to assess various entities, including people, topics, objects, or occurrences, in a specific manner.

Foot-In-The-Door Phenomenon

The foot-in-the-door phenomenon is a psychological tactic involving getting someone to agree to a small request to increase the chances they will agree to a larger request later.

Role Playing

A method for learning or therapeutic intervention where individuals act out roles in a controlled setting to gain insight into themselves or others.

Fundamental Attribution Error

The tendency for observers to underestimate situational influences and overestimate personal disposition and traits when interpreting others' behavior.