A bank creates money by
A) lending its unplanned reserves.
B) purchasing currency from the Federal Reserve.
C) buying bonds from the Federal Reserve.
D) printing more checks.

Question

Quizplus · Accepted Answer

Banks create money in the economy by lending out their excess reserves. This process is part of the fractional-reserve banking system, where banks are required to keep a fraction of their deposits in reserve but can lend out the remainder.

A Bank Creates Money by