Money is destroyed when
A) loans are made.
B) checks written on one bank are deposited in another bank.
C) loans are repaid.
D) the net worth of the banking system declines.

Question

Quizplus · Accepted Answer

Money is created when loans are made, but it is destroyed when loans are repaid. This is because the money created through the loan is effectively erased when the borrower uses it to repay the loan. Therefore, option C is the correct answer as it directly addresses the destruction of money. Options A, B, and D do not accurately describe the process of money destruction.

Money Is Destroyed When