Asked by Hermelinda Mendoza on Jul 30, 2024
Verified
Money is created when
A) a bank gives you a $1,000 loan.
B) you pay back a $1,000 loan to a bank.
C) you write a check for $1,000.
D) you deposit $1,000 cash to be deposited in your checking account.
E) you cash a check for $1,000 at your bank.
Created Money
Money that has been generated through the banking system's lending processes, beyond the base money originally introduced into the economy.
- Outline the pathways for the origination and extinguishment of money within the banking apparatus.
Verified Answer
ZK
Zybrea KnightAug 04, 2024
Final Answer :
A
Explanation :
When a bank provides a loan, it creates new money by adding the loan amount to the borrower's account. This is also known as "credit creation". Therefore, when a bank gives you a $1,000 loan, it creates new money.
Learning Objectives
- Outline the pathways for the origination and extinguishment of money within the banking apparatus.