Asked by
Austin Codrington
on Nov 11, 2024
Verified
Suppose a bank lends you $1,000 to purchase a car.Which of the following correctly represents the changes in the bank's balance sheet before you spend the money?
A) Assets: loans,+$1,000;Liabilities and net worth: checking deposits,+$1,000
B) Assets: loans,-$1,000,checking deposits,+$1,000;Liabilities and net worth: no change
C) Assets: loans,+$1,000,checking deposits,-$1,000;Liabilities and net worth: no change
D) Assets: checking deposits,+$1,000;Liabilities and net worth: loans,+$1,000
E) Assets: checking deposits,+$1,000;Liabilities and net worth: loans,-$1,000
Checking Deposits
Deposits held in bank accounts from which funds can be withdrawn without notice using checks, debit cards, or electronic transfers.
Loans
Money or items of value provided to a borrower with the expectation of future repayment plus interest.
- Comprehend the composition and role of assets and liabilities within bank balance sheets.
- Clarify the connection between loans and deposits within the banking system.
Verified Answer
SS
Learning Objectives
- Comprehend the composition and role of assets and liabilities within bank balance sheets.
- Clarify the connection between loans and deposits within the banking system.