Banks do not create money when they make loans.

Name: Banks do not create money when they make loans.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When banks make loans, they create new money through the process of fractional reserve banking. This means that they are able to lend out a portion of the deposits they hold, increasing the money supply in the economy. However, they are subject to reserve requirements set by central banks, which limit the amount of new money they can create.

Banks Do Not Create Money When They Make Loans