Which of the following might limit the money creation process to an amount less than the potential amount?
A)bank pursuit of profits
B)public holding some cash
C)business demand for loan
D)increased use of credit cards

Question

Which of the following might limit the money creation process to an amount less than the potential amount?
A)bank pursuit of profits 
B)public holding some cash 
C)business demand for loan 
D)increased use of credit cards

Quizplus · Accepted Answer

If the public holds onto some of their money in cash, it is not being deposited into banks and therefore the banks cannot use that money to make loans, limiting the potential amount of money creation. The other options do not necessarily directly limit the money creation process. Bank pursuit of profits may actually encourage them to make more loans and create more money. Business demand for loans and increased use of credit cards would both potentially increase the amount of money creation.

Which of the Following Might Limit the Money Creation Process