Which of the Following Is Correct

question 96

Multiple Choice

Which of the following is correct?

• A) Both the granting and repaying of bank loans expand the aggregate money supply.
• B) Granting and repaying bank loans do not affect the money supply.
• C) Granting a bank loan destroys money; repaying a bank loan creates money.
• D) Granting a bank loan creates money; repaying a bank loan destroys money.

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Definitions:

Checks

Checks are written, dated, and signed instruments that direct a bank to pay a specific amount of money from the writer's account to the person or entity in whose name the check has been issued.

Drafts

Written orders by one party (the drawer) to another (the drawee) to pay a specific amount of money to a third party (the payee) on demand or at a specified future date.

Promissory Notes

Written and signed agreements in which one party promises to pay another a specified sum of money either on demand or at a future date.

Specified Date

A particular or agreed upon day on which an event is scheduled to occur or a deadline is to be met.