Class 10 Exam  >  Class 10 Questions  >  How do commercial banks create credit?a) By p... Start Learning for Free
How do commercial banks create credit?
  • a)
    By providing loans without any collateral requirements
  • b)
    By directly transferring funds from depositors to borrowers
  • c)
    By using primary deposits to issue loans against collateral
  • d)
    By holding all customer deposits in cash
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
How do commercial banks create credit?a) By providing loans without an...
Commercial banks create credit primarily by using primary deposits to issue loans against collateral. When deposits are received, banks retain a fraction as reserves and lend out the remainder, generating new credit in the form of derivative deposits. This process helps stimulate economic activity by making funds available for various purposes.
Explore Courses for Class 10 exam

Top Courses for Class 10

Question Description
How do commercial banks create credit?a) By providing loans without any collateral requirementsb) By directly transferring funds from depositors to borrowersc) By using primary deposits to issue loans against collaterald) By holding all customer deposits in cashCorrect answer is option 'C'. Can you explain this answer? for Class 10 2025 is part of Class 10 preparation. The Question and answers have been prepared according to the Class 10 exam syllabus. Information about How do commercial banks create credit?a) By providing loans without any collateral requirementsb) By directly transferring funds from depositors to borrowersc) By using primary deposits to issue loans against collaterald) By holding all customer deposits in cashCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Class 10 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How do commercial banks create credit?a) By providing loans without any collateral requirementsb) By directly transferring funds from depositors to borrowersc) By using primary deposits to issue loans against collaterald) By holding all customer deposits in cashCorrect answer is option 'C'. Can you explain this answer?.
Solutions for How do commercial banks create credit?a) By providing loans without any collateral requirementsb) By directly transferring funds from depositors to borrowersc) By using primary deposits to issue loans against collaterald) By holding all customer deposits in cashCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for Class 10. Download more important topics, notes, lectures and mock test series for Class 10 Exam by signing up for free.
Here you can find the meaning of How do commercial banks create credit?a) By providing loans without any collateral requirementsb) By directly transferring funds from depositors to borrowersc) By using primary deposits to issue loans against collaterald) By holding all customer deposits in cashCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of How do commercial banks create credit?a) By providing loans without any collateral requirementsb) By directly transferring funds from depositors to borrowersc) By using primary deposits to issue loans against collaterald) By holding all customer deposits in cashCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for How do commercial banks create credit?a) By providing loans without any collateral requirementsb) By directly transferring funds from depositors to borrowersc) By using primary deposits to issue loans against collaterald) By holding all customer deposits in cashCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of How do commercial banks create credit?a) By providing loans without any collateral requirementsb) By directly transferring funds from depositors to borrowersc) By using primary deposits to issue loans against collaterald) By holding all customer deposits in cashCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice How do commercial banks create credit?a) By providing loans without any collateral requirementsb) By directly transferring funds from depositors to borrowersc) By using primary deposits to issue loans against collaterald) By holding all customer deposits in cashCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice Class 10 tests.
Explore Courses for Class 10 exam

Top Courses for Class 10

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev