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Westkost [7]
2 years ago
5

Explain how banks can create money.

Business
1 answer:
andrey2020 [161]2 years ago
6 0

Answer:

Banks usually operate in a fractional reserve banking system which means that they only have to keep a fraction of all their deposits and can loan out the rest, so they can create money by lending out money. For example if $10 is deposited into a bank and the required reserve ratio is 10% they can loan out $9 and have to keep only $1 in reserve. When they loan out $9 they are creating new money as someone who didn't have any money now has $9. And this keeps on going on as the $9 might also end up in the bank and 90% of that will be loaned out.

Explanation:

Banks usually operate in a fractional reserve banking system which means that they only have to keep a fraction of all their deposits and can loan out the rest, so they can create money by lending out money. For example if $10 is deposited into a bank and the required reserve ratio is 10% they can loan out $9 and have to keep only $1 in reserve. When they loan out $9 they are creating new money as someone who didn't have any money now has $9. And this keeps on going on as the $9 might also end up in the bank and 90% of that will be loaned out.

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4 0
3 years ago
Swifty Corporation expects direct materials cost of $6 per unit for 150000 units (a total of $900000 of direct materials costs).
OLga [1]

Answer:

Explanation:

hope this helps

5 0
3 years ago
The basic difference between macroeconomics and microeconomics is: In a command economy, the __________ either makes most econom
Novay_Z [31]

Question 2 options are;

- government

- market

- firm

- business sector

Answer:

1. microeconomics concentrates on the behavior of individual consumers and firms, while macroeconomics focusses on the performance of the entire economy.

2. government.

Explanation:

1. Indeed, the government in a command economy (like China) makes most economic decisions itself or at least strongly influences how the decisions are made.

2. We note that the word 'macro' indicates large scope, while 'micro' indicates a smaller scope. And so, the difference is that microeconomics concentrates on the behavior of individual consumers and firms, while macroeconomics focusses on the performance of the entire economy.

5 0
2 years ago
In late April, the Acme Construction Co. submitted a $1,200,000 progress billing on a construction contract.On May 2, the bill w
patriot [66]

Construction expenditures should be debited when <u>D. The bill is approved for payment.</u>

<u>Explanation:</u>

In the above scenario, Acme Construction Co. submitted bill amount of $1,200,000 on a construction contract. The payment of the bill was approved on May 2. According to the contract, 10% was subject to retention.

This construction expenditure is debited when the bill is approved for payment. Contract includes all the details regarding payment and terms and conditions between the companies or parties.

Once the bill submitted by company is approved, then the retention amount will be automatically debited.

8 0
3 years ago
Coastal Shores Inc. (CSI) was destroyed by Hurricane Fred on August 5, 2021. At January 1, CSI reported an inventory of $170,000
Fofino [41]

Answer:

$65,000

Explanation:

Calculation to determine what The estimated inventory loss due to Hurricane Fred would be

Beginning inventory$170,000

Add Net purchases195,000

Goods available for sale365,000

($170,000+$195,000)

Less: Cost of goods sold (300,000)

($480,000/160%)

Estimated ending inventory$65,000

($365,000-$300,000)

Therefore The estimated inventory loss due to Hurricane Fred would be $65,000

8 0
3 years ago
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