The creation of transactions deposits by bank lending is the definition of:

Question

Quizplus · Accepted Answer

The creation of transactions deposits by bank lending is called deposit creation, where banks create new deposits through lending. Banks create deposits by making loans or purchases and in turn, these deposits become a part of the money supply. Thus, option D is the correct answer.

Option A, Counterfeit money, is the production of fake money, which is illegal and does not involve any lending or deposit creation by banks.

Option B, Money laundering, is a process where illegally obtained money is converted into legitimate funds. This process involves hiding the source of money and is also illegal, and does not involve lending or deposit creation by banks.

Option C, Loan creation, is a part of deposit creation, where banks make loans and in turn, create new deposits. However, option D more accurately describes the process of bank lending and deposit creation.

The Creation of Transactions Deposits by Bank Lending Is the Definition