Tony deposits $2,000 in cash at the Last National Bank and the bank credits Tony's checking account in the amount of $2,000.Which of the following is true immediately after this transaction?
A) The money supply,M1,increases by $2,000.
B) Only the composition of M1 changes,not its amount.
C) A $2,000 loan from the Last National Bank is an asset to Tony.
D) Both the assets and the liabilities of the Last National Bank fall by $2,000.
E) The immediate effect of this transaction is that M1 increases by $2,000 times the money multiplier.
Correct Answer:
Verified
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Q126: Exhibit 14-1 Q127: What essential factor enables commercial banks to Q127: In order to increase the money supply, Q130: Exhibit 14-1 Q131: Exhibit 14-2 Q132: If the Fed purchases government securities on Q133: Which of the following would likely increase Unlock this Answer For Free Now! View this answer and more for free by performing one of the following actions Scan the QR code to install the App and get 2 free unlocks Unlock quizzes for free by uploading documents
Exhibit 14-1
Exhibit 14-1
Exhibit 14-2
