ECONOMICS
MONEY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Time deposit
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Treasury Bill
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Bill of Exchange
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demand deposit
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Detailed explanation-1: -In terms of money supply, How do commercial banks create deposits? State whether the following statements are True or False. Which of the following pairs are correctly matched? More items
Detailed explanation-2: -Answer: 1. Derivative deposits also known as secondary deposits are the deposits in excess of the minimum cash reserves to be held by the banks. These deposits are used to grant loans to the borrowers. In this way, derivative deposits form the basis of credit creation by the commercial banks.
Detailed explanation-3: -Commercial banks create credit by advancing loans and purchasing securities. They lend money to individuals and businesses out of deposits accepted from the public. However, commercial banks cannot use the entire amount of public deposits for lending purposes.