Credit Creation means creation of:

Ans (a)

Explanation:-

Credit creation means the creation of Secondary Deposits.

Commercial banks create credit by offering loans to the public from the cash reserves of the primary deposits.

But loans are not provided in cash. The amount is deposited by opening a demand deposits account in the name of the borrower.

This new demand deposit is called a secondary deposit.

The borrower withdraws the amount and settles his liabilities.

The receiver again deposits this money in their respective demand deposit accounts.

Again bank offers loans to the public from these excess cash reserves and a new secondary deposit is created in the name of the borrower.

Thus in the process of credit creation, new secondary deposits are created.