Money is "created" when
A) a depositor deposits money at the bank.
B) a bank grants a loan to a customer.
C) someone lends money to a friend or a family member.
D) people use money to pay for stuff they buy from one another.

Question

Quizplus · Accepted Answer

Money is created when banks grant loans to customers. When a bank grants a loan, it credits the borrower's account with money that did not previously exist. This newly created money becomes part of the money supply and can be used for transactions by the borrower. Deposits and purchases of goods and services do not create new money, they simply transfer existing money from one person or entity to another. Lending money to friends or family members also does not create new money, as it is not part of the formal banking system.

Money Is "Created" When