Which institutions are central to the process of determining the nation's money supply?
A)Commercial banks, savings and loan associations, credit unions, and mutual savings banks
B)Insurance companies
C)Private and public pension funds
D)None of the above; the amount of gold determines nation's money supply

Question

Quizplus · Accepted Answer

Commercial banks, savings and loan associations, credit unions, and mutual savings banks are the institutions that can create and destroy money by issuing loans, which affects the money supply in the economy. Therefore, they are central to the process of determining the nation's money supply, as opposed to insurance companies and private or public pension funds, which do not directly create or affect the money supply. The amount of gold does not determine a modern nation's money supply, as most countries have moved away from the gold standard and use fiat money.

Which Institutions Are Central to the Process of Determining the Nation's