A bank creates money

Name: A bank creates money
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Question

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When a bank makes a loan, it creates new money in the form of a deposit in the borrower's account. This is known as "bank money" or "inside money." When borrowers use this newly created money to make purchases or payments, it circulates in the economy as a medium of exchange, just like physical currency. However, it's important to note that banks can only create money up to a certain limit, based on their reserves and capital requirements.

A Bank Creates Money