Question

How do banks lend loans to the public?
Class 10
Economics
Chapter- Money and credit

Answer 1

Answer:

In order to lend out more, a bank must secure new deposits by attracting more customers. Without deposits, there would be no loans, or in other words, deposits create loans. ... If the reserve requirement is 10% (i.e., 0.1) then the multiplier is 10, meaning banks are able to lend out 10 times more than their reserves.

Explanation:

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