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Question

Through the process of _____________ commercial banks are able to create credit, which is in far excess of the initial deposits.

A
Advancing of loans
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B
Money Creation
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C
Accepting Deposits
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D
None of these
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Solution

The correct option is A Accepting Deposits


A commercial is that financial institution which accepts deposit from people and offers loan for the purpose of consumption or investment.
The main function of commercial bank is to create credit through the primary deposits which it receives from the public in order to provide more credit to the public.


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