Individual chartered banks are limited in their ability to create money by lending because:
A)lending is likely to result in the loss of reserves to other banks.
B)only the Department of Finance is authorized to create new money.
C)the Bank of Canada prohibits bank lending when the result is an expansion of the money supply.
D)banking is a highly competitive industry.

Question

Quizplus · Accepted Answer

Individual chartered banks are limited in their ability to create money by lending because when they lend, the reserves may be transferred to other banks, reducing their own reserves and limiting further lending.

Individual Chartered Banks Are Limited in Their Ability to Create