Money is created when:
A) Congress orders it to be created.
B) the Treasury prints a new securities issue.
C) loans made by the federal government are repaid.
D) financial depository institutions such as commercial banks make loans.

Question

Quizplus · Accepted Answer

Money creation in modern economies primarily occurs through the lending activities of commercial banks. When banks provide loans to their customers, they create new bank deposits in the process, effectively increasing the money supply. This process is distinct from the physical printing of money, which is done by a country's mint on behalf of the treasury and does not in itself increase the money supply in the banking system.

Money Is Created When