one numerical example of credit creation process
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The money supply in the economy will increase by the amount (times) of credit multiplier.
(i) All banks are one unit.
(ii) All the transactions are made through banks.
Answered by
12
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Commercial banks accept deposits and lend money to the needy borrowers. Through this process they create two types of deposits
, (i) primary deposits and
(ii) derivative or active deposits.
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