Economics · Macroeconomics
Consider the following statements with reference to credit creation by commercial banks: 1. The formation of derived deposits is called credit creation. 2. Loans create deposits, and deposits create loans. 3. Bank deposit multiplier = 1r (where r = Cash Reserve Ratio). Select the correct answer using the code given below:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 12 and 3 only
- 21 and 2 only
- 31, 2 and 3✓
- 41 and 3 only
Correct answer
1, 2 and 3
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