When a bank makes a loan what happens to the amount of money in deposits it holds and to the quantity of money in the economy? A. Bank deposits decrease, the quantity of money increases. B. Bank deposits do not change, the quantity of money does not change. C. Bank deposits decrease, the quantity of money does not change. D. Bank deposits do not change, the quantity of money increases. Submit

When a bank makes a loan what happens to the amount of money in deposits it holds and to the quantity of money in the economy? A. Bank deposits decrease, the quantity of money increases. B. Bank deposits do not change, the quantity of money does not change. C. Bank deposits decrease, the quantity of money does not change. D. Bank deposits do not change, the quantity of money increases. Submit

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter25: Money, Banking, And The Federal Reserve System

Section: Chapter Questions

Problem 7P

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Similar questions

1Money is created when A. a depositor deposits money at the bank. B. a bank grants a loan to a customer. C. someone lends money to a friend or a family member. D. people use money to pay for stuff they buy from one another.
Which of the following is money? A. A check is money because while it is in circulation the quantity of money increases by the amount of the check. B. Deposits are money, checks are not money, and credit cards are not money. C. A credit card is money because it allows you to take a loan at the instant you buy something. D. Currency is money and credit cards are money because they are means of payment, but deposits are not money.
Which of the following is true about banks? Select one: a. The interest rate banks charge when they lend is the same they pay for the deposits they receive. b. Banks are financial institutions through which savers can directly provide funds to borrowers. c. Typically, banks receive few but big deposits, which they then use to make many small loans. d. Through the checking accounts they facilitate, banks provide a medium of exchange.
1. What would happen if you couldn’t withdraw your money from the bank? 2. What would happen if none of the banks would lend to you to buy a house? 3. What would happen if the banks would not lend to small businesses? 4. What would happen if you had to wait two weeks to withdraw your funds?
Subtracting the value of a bank's liabilities from the value of its assets leaves its A. deposits. B. capital. C. net income. D. gross income.
Use a diagram to describe the structure of a bank bill.
What are bank reserves? a.Deposits that are held in the form of gold reserves b.The fraction of deposits kept as currency that are not used for lending purposes c.The value of the owner’s equity in the bank d.The value of investments a bank keeps in excess of the value of deposits e.The sum of all loans a bank makes to borrowers
You are been asked by your younger sister to explain what banking is, write brief description of the activities of a bank explaining how they generate income.
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Who is responsible for creating money?
Suppose that you run a business and during your management of money, some cash remains. What should you do with that cash?