How do the banks create money?

A. When there is a decrease in checking account deposits, banks lose reserves and reduce their loans, and the money supply expands
B. When there is an increase in checking account deposits, banks gain reserves and make new loans, and the money supply expands
C. Banks buy bonds in the open market and gain reserves; this excess reserve holding increases the money supply

Ans: B. When there is an increase in checking account deposits, banks gain reserves and make new loans, and the money supply expands