ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Stays in the bank
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Bank loans it out
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Bank Invests it
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Bank owner uses it as is own money
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Detailed explanation-1: -Every time a dollar is deposited into a bank account, a bank’s total reserves increases. The bank will keep some of it on hand as required reserves, but it will loan the excess reserves out. When that loan is made, it increases the money supply. This is how banks “create” money and increase the money supply.
Detailed explanation-2: -In short, banks don’t take the money that you deposit, turn around and loan it at a higher interest rate. But they do use the money you deposit to balance their books and meet the necessary cash reserves that make those loans possible.
Detailed explanation-3: -What Is A Common Range For Personal Loan Amounts? In general, most lenders allow borrowers to take out $1, 000 – $50, 000. The amount you’re approved for, however, can depend on certain factors in your finances.
Detailed explanation-4: -You normally borrow a fixed amount, repayable by set monthly instalments over an agreed period of time, called the term of the loan. You’ll usually be charged a fixed rate of interest and sometimes extra fees, especially if the loan is secured. Some lenders give loans with a variable interest rate.