Which of the following is false?
A) Under free banking,banks would not be subject to any special regulations beyond those which are required of other businesses.
B) Under free banking,banks would be allowed to issue their own currency.
C) The government would largely control the actions of banks under free banking.
D) The market forces would raise or lower the money supply under free banking.

Question

Quizplus · Accepted Answer

The statement that the government would largely control the actions of banks under free banking is false. Free banking advocates for minimal or no government intervention in the banking industry. Banks would be allowed to operate freely in the marketplace, with customers and shareholders providing the financial incentives to operate responsibly. Therefore, C is the false statement among the given options. Option A and B are true statements since the core principle of free banking is to allow private banks to operate without any special regulations from the government, and the banks would be allowed to issue their own currency. Option D is also true as free banking advocates for market forces to determine the money supply rather than government intervention.

Which of the Following Is False