Correct Answer: Lending out the deposits they receive

Solution : The correct answer is (b). Lending out the deposits they receive

Commercial banks can create money through the process of lending. When a bank receives deposits from customers, it keeps only a fraction of those deposits as reserves and lends out the remaining amount. This lending creates new deposits in the banking system, effectively increasing the money supply. This process, known as fractional reserve banking, allows banks to create money through the expansion of credit. However, it's important to note that commercial banks do not have the authority to print currency notes and coins, which is the responsibility of the central bank.