10 Questions
What term is used to describe money issued by central banks?
Base money
Which entity is primarily responsible for money creation in most modern economies?
Central banks
How does the commercial banking system primarily create the majority of the money supply?
By issuing bank loans
What expands the quantity of broad money beyond the original amount of base money issued by the central bank?
Fractional reserve banking
How do central banks monitor the amount of money in the economy?
By measuring monetary aggregates
Which entity has the primary control over money creation in most modern economies?
Central banks
What is the term used to describe money created by the commercial banking system?
Bank deposits
How does the commercial banking system expand the quantity of broad money beyond the original amount of base money issued by the central bank?
By practicing fractional reserve banking
What is the term used to describe the total amount of cash and bank deposits in the economy?
Broad money
What can governmental authorities, including central banks and bank regulators, use to influence money creation?
Open market operations
Test your knowledge on money creation and central banks' role in increasing the money supply. Learn about base money, open market operations, and more in this quiz.
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