Final answer:
Ms. Lagrarxa investing her own money into her business is a standard practice for small business owners to fund their operations. She followed this by adding equity to her business via a cash deposit and potentially accessing borrowed funds through a credit card. Understanding different forms of money like M1 and M2 is also crucial in business financial planning.
Step-by-step explanation:
When Ms. Lagrarxa invested $75,000 of her own money into the business’s checking account, she followed a common practice for small business founders. This injection of personal funds is considered equity and is the primary method of funding for many new businesses. Additionally, obtaining a business credit card is a way to access borrowed funds, which could be used for various business expenses.
Business owners often invest their own money to cover startup costs. Alternatively, some seek funds from "angel investors," who provide capital in exchange for a share in the company. In both scenarios, the money serves as the lifeblood for the business's initial operations and growth.
Moreover, understanding the concepts of M1 and M2 money supply is crucial in business and economics. M1 includes more liquid forms of money, such as cash and checking account balances, whereas M2 includes M1 plus savings accounts and other deposits. It's essential to recognize the distinctions between different forms of money as they can have different impacts on the economic health of a business.