What is the likely impact of money creation by the commercial banks on national income?
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The deposit of money by the people in the banks and the subsequent lending of loans by the commercial banks is a never-ending process. This lending process of the commercial banks increases the rate of investment and production in the economy, which in turn help in improving the national income in the economy.
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ɪᴍᴘᴀᴄᴛ ᴏғ ᴍᴏɴᴇʏ ᴄʀᴇᴀᴛɪᴏɴ ʙʏ ᴛʜᴇ ᴄᴏᴍᴍᴇʀᴄɪᴀʟ ʙᴀɴᴋs ᴏɴ ɴᴀᴛɪᴏɴᴀʟ ɪɴᴄᴏᴍᴇ
➞ᴛʜᴇ ᴅᴇᴘᴏsɪᴛ ᴏғ ᴍᴏɴᴇʏ ʙʏ ᴛʜᴇ ᴘᴇᴏᴘʟᴇ ɪɴ ᴛʜᴇ ʙᴀɴᴋs ᴀɴᴅ ᴛʜᴇ sᴜʙsᴇǫᴜᴇɴᴛ ʟᴇɴᴅɪɴɢ ᴏғ ʟᴏᴀɴs ʙʏ ᴛʜᴇ ᴄᴏᴍᴍᴇʀᴄɪᴀʟ ʙᴀɴᴋs ɪs ᴀ ɴᴇᴠᴇʀ-ᴇɴᴅɪɴɢ ᴘʀᴏᴄᴇss.
➞ᴛʜɪs ʟᴇɴᴅɪɴɢ ᴘʀᴏᴄᴇss ᴏғ ᴛʜᴇ ᴄᴏᴍᴍᴇʀᴄɪᴀʟ ʙᴀɴᴋs ɪɴᴄʀᴇᴀsᴇs ᴛʜᴇ ʀᴀᴛᴇ ᴏғ ɪɴᴠᴇsᴛᴍᴇɴᴛ ᴀɴᴅ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ ɪɴ ᴛʜᴇ ᴇᴄᴏɴᴏᴍʏ, ᴡʜɪᴄʜ ɪɴ ᴛᴜʀɴ ʜᴇʟᴘ ɪɴ ɪᴍᴘʀᴏᴠɪɴɢ ᴛʜᴇ ɴᴀᴛɪᴏɴᴀʟ ɪɴᴄᴏᴍᴇ ɪɴ ᴛʜᴇ ᴇᴄᴏɴᴏᴍʏ.
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