The fractional reserve characteristic of the banking system allows banks to create money and also create wealth from bank deposits. Describe why this statement is or is not true
This statement is not true.
Banks can create money through the multiplier effect. However, bank deposits do not increase wealth in the economy. This is because every deposit in a bank results in an offsetting increase in liabilities within the economy. Although bank deposits can lead to money creation, wealth remains unchanged.
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Total utility
A) cannot decrease as a person consumes more and more of a good. B) has a constant rate of increase as a person consumes more and more of a good. C) is equal to the sum of the marginal utilities of all units consumed. D) is negative when marginal utility is declining.
Which of the following demonstrates the law of supply?
a. When the price of leather belts rose, leather belt sellers increase their quantity supplied of leather belts.
b. When car production technology improved, car producers increased their supply of cars.
c. When sweater producers expected sweater prices to rise in the near future, they decreased their current supply of sweaters.
d. When ketchup prices rose, ketchup sellers decreased their quantity supplied of ketchup.