Which of the following statements is correct?
A) When borrowers repay bank loans, the money supply is increased
B) When borrowers take out bank loans, the money supply is decreased
C) A single bank can legally lend an amount equal to its total reserves
D) A bank can only grant loans to customers if it has excess reserves

Question

Quizplus · Accepted Answer

A bank can only grant loans to customers if it has excess reserves, as it needs to maintain a certain level of required reserves by regulation.

Which of the Following Statements Is Correct