Which of the following is a characteristic of the 'Endogenous Money' view?
A. The money supply is strictly controlled by the central bank through the monetary base
B. Banks play no role in money creation
C. Only the monetary base matters
D. The money supply is determined primarily by the demand for bank credit and accommodates itself to that demand
Answer: Option D
Solution (By JKSSB Mock Tests)
The endogenous-money approach argues that the quantity of money is determined by the demand for loans and the willingness of banks to extend credit, with the central bank mainly setting the price of reserves rather than the quantity of base money.
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