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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Describe how banks create money.

To determine

How banks create money.

Explanation

Any commodity or item that the community accepts as payment for the goods and services is known as money. It can be any commodity that the consumer gives for exchange. The banks are financial institutions that play an important role in the financial market. They are the institutions that accept the excess savings of people as deposits and use the deposits to provide loans to the needy people. The banks provide interest to the depositors and collects higher interests from the borrowers...

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