Answer:
The bank will keep some of it on hand as required reserves, but it will loan the excess reserves out. When that loan is made, it increases the money supply. This is how banks “create” money and increase the money supply. When a bank makes loans out of excess reserves, the money supply increases.
Explanation:
Banking has a significant impact on the money supply in an economy. Through fractional reserve banking, banks can create new money when they lend to borrowers, thereby increasing the money supply.
How does banking affect the money supply?
Conversely, when loans are repaid, money is effectively destroyed, decreasing the money supply. Reserve requirements set by central banks also affect the lending capacity of banks and, therefore, impact the money supply.
Central banks themselves play a crucial role in managing the money supply through various policy tools and actions. Overall, banking activities, including lending, repayment, reserve requirements, and central bank actions, collectively influence the money supply and play a vital role in the functioning of an economy.
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EXTRA POINTS WILL MARK BRAINLY!
Which event is considered to be the largest involuntary migration of people in world history?
A. transatlantic slave trade
B. British prisoners sent to Australia
C. Vietnam War
D. Irish migration
Answer: transatlantic slave trade
Answer:
A. transatlantic slave trade
It transferred over 12 million people from African to all over the world.