Loans offered by commercial banks ____ (increase/decrease) the money supply in the economy.
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Loans offered by commercial banks ____ (increase/decrease) the money supply in the economy.
Anurag Pathak Changed status to publish December 24, 2023
Loans offered by commercial banks increase (increase/decrease) the money supply in the economy.
Explanation:-
commercial banks offer loans to others from the cash reserves created by initial deposits by the public.
The amount of such a loan is provided to the borrower by opening a new demand deposit account.
This demand deposit acts as money as it can be used to make settlement of financial obligations.
Anurag Pathak Changed status to publish December 24, 2023
