Answer:
Loans
Explanation:
The money-creating transactions of a bank that directly impact the money supply are loans.
We can illustrate why with this simple example:
Suppose Bank of America gets a deposit of $800 and the reserve requirement is 20%, thus, it will keep $160 in reserve and loan out the remaining $640.
Bank of America Balance Sheet
Assets Liabilities
Reserves $160 Deposits $800
Loans $640
The $640 that is loaned out is money that is in the hands of a person other than the one who deposited the $800 in the first place. In other words it is new money that Bank of America has created when it made the loan.
