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Endogenous Money Theory offers a different way of understanding how banks create money. In this conception:...

Endogenous Money Theory offers a different way of understanding how banks create money. In this conception: (choose all that are correct)

A.

the commercial banking system creates money as a multiple of base money
B.

the Central Bank determines how much money the commercial banking system can crea
C.

the commercial banking system drives the money supply through its lending process
D.

the Central Bank creates the entire money supply
E.

the banking system will creates loans that it feels are profitable and find the necessary reserves later
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Answer #1

Endogenous money is an economy’s supply of money that is determined endogenously—that is, as a result of the interactions of other economic variables, rather than exogenously (autonomously) by an external authority such as a central bank.The theoretical basis of this position is that money comes into existence through the requirements of the real economy and that the banking system reserves expand or contract as needed to accommodate loan demand at prevailing interest rates.

Therefore, the correct options are: Option A, C and E.

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