The key to understanding the money creation process is the fact that:.a. since the money supply excludes cash but includes checking account deposits, money is created whenever individuals deposit cash into a checking account. b. whenever banks create financial liabilities for themselves, they create financial assets for individuals, and those financial assets are considered money. c. whenever banks create financial assets for themselves, they create financial liabilities for individuals, and those financial liabilities are considered money. d. banks are able to print dollar bills and add these to circulation whenever they extend loans.

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan