Depository institutions create money when they use their excess reserves to make loans or acquire new investments.

Name: Depository institutions create money when they use their excess reserves to make loans or acquire new investments.
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This is known as the money multiplier effect. When a bank loans out money, that money is deposited in another bank, which can then loan out a portion of that money, and so on. This leads to an increase in the total money supply in the economy.

Depository Institutions Create Money When They Use Their Excess Reserves