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WAEC Economics 2008 Question 40

Question 40

Financial Institutions

Creation of money by commercial banks is done by

  1. A.increasing the cash ratio
  2. B.printing money
  3. C.lending to borrowers
  4. D.issuing cheques.
Show the answer and explanation

Answer: C (lending to borrowers)

Explanation

When banks lend, they create new deposits, which are money.