A) By opening new checking accounts and giving more people access to readily available cash, financial institutions expand the money supply.
B) By issuing money through government contracts, financial institutions expand the money supply.
C) By taking deposits and loaning out these funds, financial institutions expand the money supply.
D) By paying interest on its accounts and investments, financial institutions expand the money supply.
E) By giving interest from its accounts to its clients, financial institutions expand the money supply.
Answer:
C
Explanation: C) Further, the money supply expands because banks are allowed to loan out most (although not all) of the money they take in from deposits.