asked 118k views
5 votes
Allen deposits $2,000 in his local bank. He earns 2 percent interest each year on his deposit. Jessica borrows $1,000 from the same bank. She is charged a 7 percent interest rate on the borrowed money. How do these bank practices affect the money supply in the community?

A. In Allen's case, but not Jessica's, the money supply decreases.

B. In both Allen's and Jessica's cases, the money supply decreases.

C. In Jessica's case, but not Allen's, the money supply stays the same.

D. In neither Jessica's nor Allen's case does the money supply increase.

2 Answers

1 vote

Answer:

A is the correct answer,

Step-by-step explanation:

I got it right on the test

answered
User Nicole Sullivan
by
7.7k points
4 votes
A is the correct answer
answered
User Yves Amsellem
by
7.3k points
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