Question

Which example best describes how a bank injects money into the economy? A bank opens a savings account for a customer. A bank approves a mortgage for a customer. A bank buys a company’s rapidly growing stock. A bank buys property in a bustling business district.

Answer 1

The Correct Answer is B.

Explanation:

A Mortgage is a loan that is provided by a bank lends to a person on an agreed-upon interest rate and which lender has to return to the bank in a particular time otherwise bank will sell its property to get its money back.

The meaning of Injecting money in the economy is circulating more money in the economy. It means more money supply in the economy. Therefore, when Banks approves a mortgage for a customer it means more money supply in the Economy because a bank is supplying money to its customers in the form of loans and this circulation of money becomes the part of the economy.

Answer 2

The correct answer would be option B, A bank approves mortgage for a customer.

Step-by-step explanation:

Injecting money into the economy means increasing money supply in the economy. It means more money is in the circulation. So when a bank approves a mortgage for a customer, it means bank is releasing money which will be in circulation and becomes a part of the economy. Mortgage is basically the loan or money which a bank or financial institution lends to a person or company on an agreed upon interest rate in exchange of their property with the condition that the bank will sell the property to get its money back if the borrower fails to return the loaned money. So the best example of how a bank can inject money into the economy is to approve the mortgage for a customer.