Typically,when someone borrows money from a bank,M2 ________,because ________.
A)increases;the money is held for a while in a liquid form
B)decreases;the money is held for a while in a liquid form
C)does not change;the loan affects only the subcategories within M2
D)decreases;of the decline in the bank's vault cash
E)none of the above

Question

Quizplus · Accepted Answer

When someone borrows money from a bank, M2 increases because the loan amount is deposited into the borrower's account, which is a component of M2. This increases the supply of money in circulation, but it may only be temporary if the borrower repays the loan quickly. Therefore, M2 increases due to the creation of new money when the loan is made, but it may decrease if and when the loan is repaid.

Typically,when Someone Borrows Money from a Bank,M2 ________,Because ________

Typically,when Someone Borrows Money from a Bank,M2 ,Because