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Commercial banks to expand deposit through expanding their loans and advances is known as _______

  • Commercial banks to expand deposit through expanding their loans and advances is known as Credit creation.
  • When commercial banks lend money to borrowers, they create new deposits in the process.
  • This is because the money that the banks lend is typically deposited back into the banking system, either by the borrower or by the recipient of the funds.
  • It creates a cycle of lending and deposit creation, which can expand the overall money supply in the economy and is known as credit creation.