Because banks earn money when it makes a loan to a borrower it:
A) it has an incentive to loan out as much of each deposit it can.
B) it has an incentive to borrow from the government as much as it can to loan out.
C) it needs to loan out more than it takes in through deposits to make money.
D) it has more of an incentive to loan out money than take money in through deposits.
Correct Answer:
Verified
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A) very efficient compared to using
Q21: Banks create money in the economy by:
A)loaning
Q22: Fiat money is:
A)any form of money that
Q22: Any amount that a bank chooses to
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Q23: If fractional reserve banking exists,then:
A)banks need only
Q29: If the reserve ratio was 100 percent,then:
A)no
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