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6 May, 12:22

Assume that Jones deposits $500 in currency into her checkable deposit account in First National Bank. A half‑hour later Smith obtains a loan for $750 at this bank. By how much and in what direction has the money supply changed? Explain.

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  1. 6 May, 12:37
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    money supply increase here $750

    Explanation:

    given data

    deposits = $500

    loan = $750

    time = half hour

    to find out

    how much and in what direction has the money supply changed

    solution

    we know that Currency and check able deposits both are the part of money supply

    so that Jones deposit money not impact the money supply

    and we know when we go for loan, bank open check able deposit account

    so we can say new loan made is = $750

    Check able deposit is also part of money supply

    so money supply increase here $750
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