The banking system creates money in the sense that it:
a. prints money.
b. creates excess reserves from loans.
c. creates loans from excess reserves.
d. creates required reserves from loans.
e. creates loans from required reserves.
Question 2
The aggregate expenditure line is drawn on a graph that measures:
a. real GDP on the horizontal axis and aggregate expenditure on the vertical axis.
b. aggregate expenditure on the horizontal axis and real GDP on the vertical axis.
c. consumption on the horizontal axis and aggregate expenditure on the vertical axis.
d. aggregate expenditure on the horizontal axis and consumption on the vertical axis.
e. investment on the horizontal axis and aggregate expenditure on the vertical axis.
