The power of a bank to create credit is affected by ?
Correct answer: D. A and B of above
- A. The cash reserve requirement
- B. The amount of cash available
- C. The number of branches of a bank
- D. A and B of above
Explanation
Credit creation depends on both the reserve requirement, which limits the deposit multiplier, and the cash or reserves available to the bank. Therefore, both statements A and B are relevant.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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