A Single Bank Is Severely Limited in Its Ability to Create

question 137

Multiple Choice

A single bank is severely limited in its ability to create money because:

• A)​the FDIC will not permit it to create money unless the Resolution Trust Corporation guarantees the loans.
• B)​loan recipients usually take the proceeds of the loan in cash.
• C)​the funds loaned probably will be deposited in another bank.
• D)​recent federal legislation prohibits banks from creating money except to finance international trade.

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