If banks are willing to make loans and consumers and businesses are willing to borrow money,this constrains the money supply.
When banks make loans and consumers and businesses take out loans,the money supply increases because the amount in transactions accounts increases.

Question

Quizplus · Accepted Answer

When banks make loans and consumers and businesses take out loans, the money supply actually increases because new money is created through the lending process.

If Banks Are Willing to Make Loans and Consumers and Businesses