How does Commercial Banks create money?

13. How does Commercial Banks create money?

  1. Through Cash Reserve Ratio
  2. Through Investing
  3. Issue of Loans
  4. Accepting New Deposits

Answer: C) Issue of Loans

Explanation:

Commercial Bank Loan is an obligation based subsidizing course of action between a business and a monetary establishment like a bank. It is ordinarily used to subsidize significant capital uses or potentially cover functional costs that the organization may somehow not be able to bear. Costly forthright expenses and administrative obstacles frequently keep independent companies from having direct admittance to security and value markets for financing. This implies that similar to individual customers, more modest organizations should depend on other loaning items, for example, credit extensions, unstable advances or term advances.

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