Get premium membership and access questions with answers, video lessons as well as revision papers.
This is a process in which banks multiply money in the economy using the deposits of their consumers. When an individual deposits cash in a bank, the deposited cash becomes a liability to the bank and an asset to the depositor. The bank converts the liability into an asset through reserves and loans given out to borrowers. The process of money creation is referred to as credit creation. The process continues indefinitely subject to the following limitations: the cash ratio, lack of demand for loans and cash drain
Dana05 answered the question on August 14, 2019 at 07:15
- Highlight the properties of money as a medium of exchange (Solved)
Highlight the properties of money as a medium of exchange
Date posted: August 14, 2019. Answers (1)
- Describe how paradox of thrift occurs (Solved)
Describe how paradox of thrift occurs
Date posted: August 14, 2019. Answers (1)
- How is a deflationary gap removed (Solved)
How is a deflationary gap removed
Date posted: August 14, 2019. Answers (1)
- Describe the occurrence of an inflationary gap in the economy (Solved)
Describe the occurrence of an inflationary gap in the economy
Date posted: August 14, 2019. Answers (1)
- What are the challenges faced by clearing and forwarding firms?(Solved)
What are the challenges faced by clearing and forwarding firms?
Date posted: July 29, 2019. Answers (1)
- Differentiate between an inflationary gap and the deflationary gap (Solved)
Differentiate between an inflationary gap and the deflationary gap
Date posted: July 18, 2019. Answers (1)
- Describe the paradox of thrift (Solved)
Describe the paradox of thrift
Date posted: July 18, 2019. Answers (1)
- Derive the multiplier with foreign exchange (Solved)
Derive the multiplier with foreign exchange
Date posted: July 18, 2019. Answers (1)
- Derive the multiplier when tax depends on income (Solved)
Derive the multiplier when tax depends on income
Date posted: July 18, 2019. Answers (1)
- Derive the balanced budget multiplier(Solved)
Derive the balanced budget multiplier
Date posted: July 18, 2019. Answers (1)
- Derive the tax multiplier(Solved)
Derive the tax multiplier
Date posted: July 18, 2019. Answers (1)
- Derive the multiplier with government spending (Solved)
Derive the multiplier with government spending
Date posted: July 18, 2019. Answers (1)
- Derive the multiplier for investment (Solved)
Derive the multiplier for investment
Date posted: July 18, 2019. Answers (1)
- Derive the multiplier for induced investment (Solved)
Derive the multiplier for induced investment
Date posted: July 18, 2019. Answers (1)
- What factors cause a shift in the IS curve(Solved)
What factors cause a shift in the IS curve
Date posted: July 18, 2019. Answers (1)
- derive of the IS equation using the expenditure approach and assuming the absence of government. (Solved)
Derive the IS equation using the expenditure approach and assuming the absence of government.
Date posted: July 18, 2019. Answers (1)
- Describe the life cycle income hypothesis of consumption (Solved)
Describe the life cycle income hypothesis of consumption
Date posted: July 18, 2019. Answers (1)
- Describe the permanent income hypothesis of consumption (Solved)
Describe the permanent income hypothesis of consumption
Date posted: July 18, 2019. Answers (1)
- Describe the investment demand theory (Solved)
Describe the investment demand theory
Date posted: July 18, 2019. Answers (1)
- What factors determine consumption (Solved)
What factors determine consumption
Date posted: July 18, 2019. Answers (1)