Which of the following statements is true about credit creation by banks?

CA Foundation · Business Economics · RTP · May 2025
Which of the following statements is true about credit creation by banks?
(A) A. Banks create credit on the basis of their total assets
(B) B. Banks create credit on the basis of their total deposits
(C) C. Banks create credit on the basis of their total securities
(D) D. None of these

Suggested Answer and Working Notes:

Correct Answer: Option (B)

B. Banks create credit on the basis of their total deposits

Topics: Money Market

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic