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How Can the Commercial Banking System Cause the Money Supply

Question 55

Multiple Choice

How can the commercial banking system cause the money supply to grow?


A) Every time that a bank accepts a new deposit, the money supply gets larger.
B) When loans end up as deposits, there are more excess reserves that can be lent out, and the money supply can increase.
C) When banks charge interest on loans, that extra revenue to the bank raises the money supply.
D) Banks are the issuers of currency. When they print additional currency, the money supply grows.

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