Advertisements
Advertisements
Question
What is the unique process where banks multiply money beyond original deposits through lending?
Options
Cheque system
Credit creation
Fund transfer
Safe deposit
MCQ
Advertisements
Solution
Credit creation
Explanation:
Banks keep reserves (CRR) and lend the rest; re-deposits allow repeated lending, expanding the money supply.
shaalaa.com
Is there an error in this question or solution?
