The banking system creates money.

Name: The banking system 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 increases the money supply in the economy. Additionally, banks can also create money through the process of fractional reserve banking, where they keep only a fraction of deposited funds on reserve and lend out the rest, effectively creating new money.

The Banking System Creates Money