The types of deposits that will be created by the banking system depend predominantly upon:
A)the level of interest rates.
B)the state of the economy.
C)the monetary policies of the central bank.
D)public preference.
E)None of the options is correct.

Question

Quizplus · Accepted Answer

The types of deposits created by the banking system depend primarily on the public's preference, such as whether they prefer savings or checking accounts, CDs or money market accounts. Other factors may also influence deposit creation, but public preference for different types of accounts is the main determinant. Interest rates, the state of the economy, and monetary policies may affect demand for different types of accounts, but ultimately it is the public's preference that determines the mix of deposits created by the banking system.

The Types of Deposits That Will Be Created by the Banking