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JAMB Economics 1980 Question 11

Question 11

Financial Institutions

Commercial banks can create money in the following ways

  1. A.by issuing coins and paper money
  2. B.by borrowing money from banks abroad
  3. C.by receiving deposits from individuals
  4. D.by printing money on the instructions of the Central Bank
  5. E.none of the above.
Show the answer and explanation

Answer: E (none of the above.)

Explanation

Commercial banks create money by granting loans that become new deposits, which none of options A to D describes.