Suppose a bank makes a loan to a small business so that business can purchase a new machine press. Which of the following are true of that event--that is, of the bank lending to the business? Question 7 options: The bank holds an asset in the form of the checking account opened up for the business. The bank becomes more liquid The bank holds an asset in the form of the loan agreement (the business' promise to repay the loan) The business becomes more liquid The business takes on a liability in the form of the loan agreement (the business' promise to repay the loan)

Suppose a bank makes a loan to a small business so that business can purchase a new machine press. Which of the following are true of that event--that is, of the bank lending to the business? Question 7 options: The bank holds an asset in the form of the checking account opened up for the business. The bank becomes more liquid The bank holds an asset in the form of the loan agreement (the business' promise to repay the loan) The business becomes more liquid The business takes on a liability in the form of the loan agreement (the business' promise to repay the loan)

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 3.6P

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Question 7

Suppose a bank makes a loan to a small business so that business can purchase a new machine press. Which of the following are true of that event--that is, of the bank lending to the business?

Question 7 options:

	The bank holds an asset in the form of the checking account opened up for the business.
	The bank becomes more liquid
	The bank holds an asset in the form of the loan agreement (the business' promise to repay the loan)
	The business becomes more liquid
	The business takes on a liability in the form of the loan agreement (the business' promise to repay the loan)

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