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Question
The process of money creation or credit creation is done by ______.
Options
World bank
Central bank
Rural bank
Commercial banks
MCQ
Fill in the Blanks
Solution
The process of money creation or credit creation is done by Commercial banks.
Explanation:-
Commercial banks can use the LRR (Legal Reserve Ratio) to maintain a portion of their deposits as a reserve and use the balance to extend credit. The cycle of transactions that occurs during this phase aids in the creation of money.
shaalaa.com
Money Creation Or Credit Creation by the Commercial Banking System
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