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Money-creating transactions of a bank ( _________________ ) directly impact the money supply..

User UserYmY
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Answer:

Loans

Step-by-step explanation:

The money-creating transactions of a bank that directly impact the money supply are loans.

We can illustrate why with this simple example:

Suppose Bank of America gets a deposit of $800 and the reserve requirement is 20%, thus, it will keep $160 in reserve and loan out the remaining $640.

Bank of America Balance Sheet

Assets Liabilities

Reserves $160 Deposits $800

Loans $640

The $640 that is loaned out is money that is in the hands of a person other than the one who deposited the $800 in the first place. In other words it is new money that Bank of America has created when it made the loan.

User Shabarinath Volam
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