Question

A single transaction that deposits money into a bank will increase checkable deposits for the bank, which will result in an increase in the bank's liabilities and assuming no loans are dispersed, ___ in the nation's total supply of money.

Answer 1

Depositing money into a bank will increase the nation's total supply of money.

Step-by-step explanation:

Depositing money into a bank increases the bank's checkable deposits, which in turn increases the bank's liabilities. Assuming no loans are dispersed, this will result in an increase in the nation's total supply of money. When a bank receives a deposit, it can use a portion of that money to make loans, which in turn increases the money supply. This is because the deposit is still considered to be part of the money supply while the bank loans out the funds. Therefore, the nation's total supply of money will increase.