Answer :
A relatively small fraction of the money in an economy is issued by the federal reserve the rest is created by the banks
The Federal Reserve System is the central bank of the United States. It was created by the Congress in order to provide the nation with a safer, more flexible, and more stable monetary and financial system. The responsibilities of federal reserve include regulating financial markets, setting interest rates, and managing the money supply.
In this system banks only hold a fraction of the money their customers deposit as reserves. Thus, this then allows them to use the rest of it to make loans and thereby essentially create new money.
Hence, this gives the commercial banks the power to directly affect the money supply.
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