imagine that Mr Smlth takes But 1oan for 000 to start a new businesS. The bank credits the £ T0,000 to Mr Smith's current account. Choose AT LEAST ONE correct answer. O a. Since Mr Smith has been credited with the £10,000 in his current account, yet he now owes the bank £10,000, the total amount of money in the economy has remained the same. O b. The extra £10,000 in Mr Smith's current account is an asset for the bank, because this is money that he owes to them. С. The loan is an asset for the bank. O d. At the point that the loan is made, the bank's net worth decreases and Mr Smith's net worth increases by the same amount, £10,000.

imagine that Mr Smlth takes But 1oan for 000 to start a new businesS. The bank credits the £ T0,000 to Mr Smith's current account. Choose AT LEAST ONE correct answer. O a. Since Mr Smith has been credited with the £10,000 in his current account, yet he now owes the bank £10,000, the total amount of money in the economy has remained the same. O b. The extra £10,000 in Mr Smith's current account is an asset for the bank, because this is money that he owes to them. С. The loan is an asset for the bank. O d. At the point that the loan is made, the bank's net worth decreases and Mr Smith's net worth increases by the same amount, £10,000.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Monetary System

Section: Chapter Questions

Problem 12PA

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