Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
what are the two additional steps in the deposit expansion proccess
Expert Solution
Step 1
The deposit expansion process refers to the process in which banks create extra money with the usage of the money already deposited. There is an expansion on money because when banks loan it out, the money reenters the economy. In fact, most of the money supply in majority of the countries is created in this fashion.
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